NEW YORK – A widely used economic index from Deloitte Research suggests consumer spending should grow “at a healthy pace” through the spring of 2005, finally rebounding after a tough 2004 as lower oil prices boost consumer buying power, the firm said.
“Discount retailers have not performed as well as anticipated throughout this holiday season because of low real wages, but they should see a turnaround in the coming months as falling oil prices lead to lower prices at the pump, putting more cash into consumers’ pockets,” said Carl Steidtmann, Deloitte’s chief economist and author of the monthly Leading Index of Consumer Spending.
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Wealthier consumers are expected to continue to see “strong income growth,” Steidtmann said, continuing to drive “robust retail sales for luxury retailers” this holiday season.
Deloitte’s monthly Leading Index of Consumer Spending comprises four elements: tax burden, initial unemployment claims, real wages and real home prices. In November, it rose to 5.28 percent, up from an upwardly revised gain of 5.25 percent a month ago. The rebound in the index over the past two months reflects the continued strength of the housing market and diminishing effects of the early fall hurricanes, Deloitte said.
Highlights of the index, which tracks consumer cash flow as an indicator of future consumer spending, include:
Deloitte provides audit, tax, financial advisory services and consulting through nearly 30,000 people in more than 80 U.S. cities. It is a U.S. member firm of Deloitte Touche Tohmatsu, a global firm serving more than half the world’s largest companies as well as large national enterprises, public institutions, locally important clients, and global growth companies.
