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The Ups and Downs of US Spending
The latest Deloitte Research Leading Index of Consumer Spending brings mixed messages for consumers and retailers. The Index shows a rise in consumer confidence, buoyant spending over the holiday period, and lower energy costs. It also indicates falling sales of durable goods, particularly automobiles, and a heavier tax burden.
The index, which attempts to track consumer cash flow as an indicator of future spending - fell in November to 2.73%, from an upwardly revised gain of 3.31% in September.
Deloitte measured a small increase in real consumer spending, and predicts a 4 to 4.5% rise in sales on General Merchandise, Apparel and Furniture over the holiday season. Meanwhile, real hourly wages continue to decline (currently 1.7% down from a year ago), personal income tax burdens rise, and real home prices have fallen - taking them to last year's level.
Pat Conroy, Vice Chairman of Deloitte's Consumer Business practice comments: 'The short-term signs are positive; however, longer term we believe that retailers and consumers continue to face fundamental challenges.'
Conroy recommends that retailers should be selective in their discounts, and continue to focus efforts on 'baby boom buyers', who have more discretionary income to spend over the holiday season. He also suggests that retailers aim to extend the holiday season by launching gift card redemption campaigns.
Deloitte Research operates through a network of research professionals, consulting practitioners and academic and technology partners, and is online at www.deloitte.com.
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