Deloitte: Consumer spending slips for first time in five months

NEW YORK — The Deloitte Consumer Spending Index decreased slightly in July, marking the first decline since February 2012.

The index tracks consumer cash flow as an indicator of future consumer spending.

“The Index slipped primarily due to a drop in real new home prices and a slight rise in jobless claims that offset improvements in real wages,” said Carl Steidtmann, Deloitte’s chief economist and author of the monthly Index. “Consumers enjoyed lower energy costs during the first half of the summer, but a rapidly increasing savings rate suggests they have put some recouped funds away for a rainy day rather than spending it. However, gas prices have started to tick back up. If confidence remains under pressure due to stagnant job growth, a stumbling housing market and Europe’s financial crisis, consumer spending may begin to contract heading into autumn.”

Other factors impacting the decline, Deloitte said, included rising interest income and savings rate and lower gas prices since April.

“Consumers responded favorably to markdowns and promotions in July, and we anticipate retailers will finish the summer strong as families restock before sending their children off to school,” said Alison Paul, vice chairman, Deloitte LLP and retail and distribution sector leader. “However, that momentum may be seasonal and temporary if the Index’s decline is more than a blip on the radar.”