Neither tax rates nor employment are changing much, but despite the fact that there are a few somewhat positive developments, other economic factors are moving in the wrong direction, leading Deloitte LLP to expect careful spending from consumers as we move into the holiday season.
The brightest spot noted by Deloitte is the stabilization in energy prices. However, stagnant tax rates and employment rates aren’t inspiring any consumer confidence. On top of that, housing prices are falling, banks are very cautious about lending for home purchases and foreclosures are on the rise.
The Deloitte Consumer Spending Index for September stands at 2.39, a significant drop from August’s 2.51 result, and according to Deloitte, it represents the lowest score since May 2009.
“Low mortgage rates are doing little to spur home sales as banks limit lending and foreclosures continue to increase,” explains Deloitte economist Carl Steidtmann. “While energy prices have begun to ebb, their decline will do little to increase real wages and income growth and offset the other components of the Index. The housing market also remains at risk of further decline, and both the tax rate and unemployment are stagnant.”
Retail and distribution sector leader Alison Paul added, “Consumers may start to re-evaluate what’s in their shopping baskets and put non-essentials back on the shelf until they feel more confident about the economy’s prospects. It’s critical retailers understand consumers’ purchasing behaviors and attitudes and are prepared to make quick decisions about which items to mark down and where to hold the line this holiday season. Also, by capturing non-transactional data such as interactions with customers, call center logs, click streams and social media connections, retailers can better understand what drives customer engagement and buying decisions.”
RBR-TVBR observation: Sometimes these types of surveys produce a mixed bag of results – but not this time. They almost all are one version or another of the same tune.
And here are the generic lyrics: Things could certainly be worse, but they just aren’t getting better very fast, so consumers are careful and watchful, expecting the economy to turn sooner or later and not particularly hopeful that the turn will be positive.