The Deloitte Consumer Spending Index (Index) climbed higher in March, marking only the third monthly increase over the past 12 months. The Index tracks consumer cash flow as an indicator of future consumer spending.
"The Index turned upward as the pace of declining new home prices slowed," explained
* Real incomes fell 0.1 percent in February even as consumer spending rose, and are up just 0.3 percent from a year ago. Quantitative easing is adding to the downward pressure on incomes as income from interest fell in February for the eighth consecutive month and is down 3.1 percent from a year ago, not adjusting for inflation.
* The savings rate has fallen from 4.7 percent to 3.7 percent over the past two months, adding roughly
* Gasoline prices continue to rise. The average price of gasoline rose
The Index, which comprises four components — tax burden, initial unemployment claims, real wages and real home prices — rose to 1.80 from an upwardly revised reading of 1.52 the previous month.
"The warmer weather is helping consumers shake off the winter doldrums, but they remain vigilant about their pocketbooks, particularly in the face of rising gas prices this spring," said
Highlights of the index include:
Tax burden: The tax burden continues to rise slowly even as tax revenues collected by the Federal government stagnate. Much of the increase is coming at the state and local level where tax increases have been needed to meet balanced budget requirements. The tax rate is up 10.15 percent from a year ago.
Initial unemployment claims: Claims continue to move lower from a year ago, and were at 354,750 in the most recent month. Falling jobless claims are one of the bright lights in an otherwise darkening outlook for consumer finances.
Real wages: With energy prices rising, real wages continue to fall, and are down 1.2 percent from a year ago.
Real home prices: Prices fell slightly in the most recent month, dropping 1.2 percent from a year ago, which is less than last month's decrease of more than 12 percent. A slowdown in the pace of real home prices is a positive as it becomes less of a drag on the Index.
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|Source:||Targeted News Service|