Positive conditions for consumer spending in the U.S.

The Deloitte Consumer Spending Index (Index), which is an indicator of future consumer spending, dropped slightly in August.

The Index is able to make a picture of future consumer spending by tracking consumer cash flow.

Despite the slight drop, conditions are mainly positive for consumer spending.

Deloitte’s senior U.S. economist, Daniel Bachman pointed out that “while the Index fell in August, it continues to indicate that overall conditions are positive for consumer spending.”

Home prices are increasing and unemployment rates are dropping, which both mean that household finances and sentiment have improved.

The Index fell from 4.5 in July to 4.0 in August. It is comprised of four different factors:

Tax burden – the tax rate has increased from 6.4 percent last year to 11.8 percent.
  2. Initial unemployment claims – claims have dropped 7.8 percent, compared to last year, down to 342,000
  3. Real home prices – new home prices are 7.9 percent higher at than the same time last year
  4. Real wages – hourly wages are up 0.2 percent compared to 2012

Alison Paul, vice chairman, Deloitte LLP and retail & distribution sector leader, said:

“Consumers are seeing positive signals from the economy which may buoy confidence heading into the holiday season this fall. Retailers that merge consumer data from their e-commerce and in-store businesses to gain a more holistic view of their shoppers will be strategically positioned to capitalize on the upcoming holiday season.  They will also be better prepared to more appropriately target consumers — whether in-store or online — with the right marketing promotions to drive traffic and conversion.”

U.S consumer spending is on the rise

Consumer spending climbed up to 10690.60 USD Billion in the second quarter of 2013 compared to 10644 USD Billion in the first quarter of the year.

It does not come as a surprise that consumer spending will pick up, considering that the U.S. economy is returning to normalcy, according to the latest UCLA Anderson Forecast’s outlook. 

What is The Deloitte Consumer Spending Index?

Deloitte is one of the leading audit, consulting, risk management, financial advisory and tax services companies in the world. The company provides services to more than 75 percent of the Fortune 500 retailers.

The Deloitte Consumer Spending Index is a proprietary methodology that “analyzes economic factors to gauge consumer cash flow as an indicator of future spending.  Deloitte’s analysis includes data from the U.S. Commerce Department, Bureau of Economic Analysis, U.S. Bureau of the Census, U.S. Department of Housing and Urban Development and the U.S. Department of Labor.”