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Income Gains Fuel Consumer Spending

Deloitte research shows consumers thinking about increasing holiday budgets

Retailers will be giving thanks this Thanksgiving for consumers gaining some extra green. According U.S. Bureau of Economic Analysis’ latest monthly report, income increases of $45.7 billion (0.2 percent) in October reflected a 0.7 percent increase in consumer spending.

The income uptick, albeit modest, marks the second consecutive month of gain (up 0.2 percent in September 2009). It reverses the 0.6 percent dip previously experienced in September due to the cessation of the “Cash for Clunkers” stimulus.

Retailers may very well be able to expect the spending increases to continue going into the holiday season, per recent research from Deloitte on consumer sentiment surrounding holiday spending. The study, which focused on Black Friday and Cyber Monday buying plans, found that many consumers (30 percent) are rethinking their original holiday spending plans and looking to spend more.

Eighty-six percent plan to spend more on gifts than first budgeted for. Almost half (44 percent) of consumers reported plans to shop over the Thanksgiving holiday weekend, with 68 percent planning to visit stores, 46 percent expecting to shop online and 31 percent reporting that they will do both.

According to Nielsen data, traffic to sites offering Black Friday sales jumped 87 percent to 7.0 million unique visitors during the week ending Nov. 15. Total minutes spent on deal sites increased by 763 percent over the four-week period ending Nov. 15. Top online retailers included Amazon, Wal-Mart and Best Buy.