Wages were basically flat last month but gasoline prices were rising rapidly, and according to Deloitte LLP, that is a perfect recipe for a near-term decline in overall consumer spending.
The were slight declines in three other areas measured by Deloitte’s ongoing spending study in addition to real wages – tax burden, initial unemployment claims and new home prices. The Index fell from 3.22 to 3.13 July to August.
Gasoline prices have risen an average of 43 cents per gallon at a time of year when they are usually headed in the other direction, according to Deloitte. Part of the reason was the affect of Hurricane Isaac on Mexican Gulf fuel sources.
“After a rebound during the first half of the year, the Index continued downward in August, primarily due to a drop in the price of new homes and a slight decline in the tax rate,” said Carl Steidtmann, Deloitte’s chief economist and author of the monthly Index. “Looking ahead, rising energy prices may further strain the Index heading into fall, as rising gas prices are already beginning to crimp spending.”
“Retailers rode a steady wave of consumer spending this summer, but shopper enthusiasm could start to wane in the coming months especially as prices at the pump increase,” said Alison Paul, vice chairman, Deloitte LLP and retail & distribution sector leader. “To get consumers’ attention now and hold their interest and loyalty through the upcoming holiday season, retailers should highlight their blend of physical and virtual shopping experiences. By providing interactive, digital signage inside stores, mobile applications, and mobile point-of-sale functionality, retailers can make a strong impression on shoppers and encourage them to return whenever, wherever and however they wish.”
RBR-TVBR observation: According to Deloitte, it is not too early to start getting the attention of consumers in advance of the upcoming holiday season. Sounds like a good idea to us, and something the broadcasters out there may want to share with their clients in the retail community.
