Deloitte Consumer Spending Index hits new high

12/9/2009

NEW YORK The Deloitte Consumer Spending Index rose in November to its highest level since 2004, driven largely by the decrease in initial unemployment claims along with historically low tax levels.

The index, comprising four components, including tax burden, initial unemployment claims, real wages and real home prices, rose to 4.63%, from an upwardly revised gain of 4.25% a month ago.

"The index continues a recent six-month climb due to improvement across the board in consumer fundamentals," said Carl Steidtmann, chief economist with Deloitte Research, a subsidiary of Deloitte Services LP, and author of the monthly index. "Real earnings remain on the rise due to falling prices while the housing market continues to show signs of stabilizing. A decline in initial unemployment claims has historically been a reliable signal of economic recovery, and in recent months, initial claims have continued downward. These factors may give retailers and suppliers reason for optimism going forward."

"While the recent gains in consumer spending have been encouraging, they are on the moderate side as a result of ongoing consumer caution," added Stacy Janiak, vice chairman and Deloitte's U.S. Retail leader. "With household credit conditions remaining weak, retailers may consider offering financing or other services to provide consumers with needed access to credit, along with convenient and flexible payment terms. These services may include layaway, co-branded store cards, online payment options and deferred billing, for example."

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