New York -- Deloitte reported Friday that its Consumer Spending Index rose sharply in October, primarily due to the significant increase in new home prices.
The Index tracks consumer cash flow as an indicator of future consumer spending.
“The housing market appears to be recovering after bottoming out, while energy prices have begun to recede and lift some of the pressure on wages, boosting confidence and consumers' willingness to spend,” said Carl Steidtmann, Deloitte's chief economist and author of the monthly Index. “This may only be sustainable over the long term if legislative issues are resolved, including the fiscal cliff and debt ceiling, as consumers will start to see their first tax increases at the beginning of the year.”
The Index, which comprises four components — tax burden, initial unemployment claims, real wages and real home prices — rose sharply to 4.02 from a reading of 3.54 the previous month.
“Rising consumer confidence should give retailers reason to celebrate during the holiday season, but the winds may shift in January, which should encourage retailers to make the most of this good news now,” said Alison Paul, vice chairman, Deloitte LLP and retail & distribution sector leader. “The consumers who appear most optimistic about their holiday spending are those who have been coined ‘omnichannel’ shoppers, or those who use all channels to shop, including mobile phones, online and the store.”
These consumers, according to Deloitte’s annual holiday survey, plan to spend 71% more on gifts than those who shop only in stores, and 45% plan to shop online.