Consumers may be back in the game


The tea leaf readers at Deloitte have released their latest Consumer Spending Index, and notice that real household income is now actually in better shape than it was a year ago. If that fact dawns on consumers and they have motivation to spend – something like, oh, we don’t know, maybe the holiday season — then high end predictions for this years’ spending could come true.

Deloitte’s claim that real wages are improved 4.8% over this time last year is not based on the fact that more money is coming in. But less is going out, as retailers have been cutting prices, leading to reduced household expenses and higher real wages.

Another big factor has been marked deceleration in the rate at which homes are losing value. There has also been a decline in initial unemployment claims.

“Consumers may be encouraged by improving economic conditions, but they may also need an incentive to increase their spending,” said Deloitte’s Stacy Janiak. “The intersection of the holiday season with these signs of recovery may provide that motivation. Retailers should consider improving the service offerings that appeal to consumers’ modified and judicious spending habits. These may include layaway plans, mobile commerce capabilities, exclusive limited-time offers and customer interaction via social media. Promotions that tie charitable contributions to purchases may also appeal to customers looking to bring a more meaningful element into their holiday activities.”

RBR-TVBR observation: Once again, we’ll believe all this stuff when we see it – there are plenty of good solid reasons for consumers to remain in skittish mode, and that is exactly where they are according to a lot of recent surveys. But Deloitte is an established brand, and sooner or later a positive prognosticator is going to be right. We hope this is that time.