Consumer spending picking up steam


A slowdown in the number of newly unemployed citizens coupled with across-the-board improvement in consumer fundamentals has Deloitte Research thinking positive thoughts about future consumer spending.

The Deloitte Consumer Spending index rose from 4.25 to 4.63 over the previous month and continues what Deloitte calls a six-month upward trend.

As with the last report, increases in available cash are not due so much to increased income, but rather to decreased expenditures as the recession has generally beat down prices. The decline in home prices has been a factor as well, as has a stable tax burden and the stabilizing employment situation.

“The Index continues a recent six-month climb due to improvement across the board in consumer fundamentals,” said Deloitte’s Carl Steidtmann. “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.”

RBR-TVBR observation: Jobs allow consumers to spend, and consumer spending creates jobs. It is encouraging that Deloitte seems to see progress on both sides of this chicken/egg equation.