Deloitte says that consumers got a raise during the month of September and further says that it will translate into increased spending. Other indicators did not change enough to affect Deloitte’s assessment one way or the other.
The Deloitte Consumer Spending Index rose to 4.21 from 4.11, largely on the strength of a 0.5% increase in real wages.
The other components in the index are tax burden, up only marginally; unemployment claims, which were flat; and median home prices, down a bit month over month but up considerably year over year.
“A rise in real wages boosted the Index this month,” said Daniel Bachman, Deloitte’s senior U.S. economist. “Although unemployment claims remain at the level of the previous month, seeing them continue to hover around the 300,000 mark is a positive sign for the labor market. The uptick in wages – although only of one month’s duration – is also consistent with the improving labor market. If employment and wages continue this positive trajectory, consumers are likely to respond with more confidence and higher spending.”
“Steady economic improvements influencing consumer spending point to a more optimistic outlook for the year-end shopping season,” said Alison Paul, vice chairman, Deloitte LLP and retail and distribution sector leader. “With the holidays beginning, an economy on a more even keel will be a welcome sign for retailers. Deloitte is forecasting a 4 to 4.5 percent increase in overall holiday sales this year, as consumers’ spending levels are likely to increase on the heels of personal income, job and stock market gains. Holiday cheer may be making a comeback as families look to release pent-up demand and regain confidence in the economy.”
RBR-TVBR observation: Are you thinking what we’re thinking? This is just in time for the holiday shopping season – many of these same consumers are probably making lists and budgets as we speak. This is exactly the kind of news that is great to share with prized clients and clients-to-be.