Deloitte Consumer Spending Index sees rise in March

NEW YORK — After projecting that consumers likely would spend the same or more at retail this spring, Deloitte reported Thursday that its Consumer Spending Index climbed in March, marking only the third monthly increase over the past 12 months.

The Index, which comprises four components — tax burden, initial unemployment claims, real wages and real home prices — rose to 1.80 from an upwardly revised reading of 1.52 the previous month. Despite this increase, however, Deloitte noted that several factors may be restricting consumer cash flow:

  • Real incomes fell 0.1% in February even as consumer spending rose and are up just 0.3% from a year ago. Quantitative easing is adding to the downward pressure on incomes as income from interest fell in February for the eighth consecutive month and is down 3.1% from a year ago (not adjusting for inflation);

  • The savings rate has fallen from 4.7% to 3.7% over the past two months, adding roughly $110 billion to consumer spending. Without that decline, instead of rising by 0.7%, spending would have fallen. Real consumer spending is up 1.8% from a year ago; and

  • Gasoline prices continue to rise. The average price of gasoline rose 4 cents last week to $3.97 a gallon up 68 cents since mid-December.

"The warmer weather is helping consumers shake off the winter doldrums, but they remain vigilant about their pocketbooks, particularly in the face of rising gas prices this spring," said Alison Paul, vice chairman of Deloitte LLP and retail and distribution sector leader. "In our third annual spring survey of U.S. households, consumers told us they are feeling slightly better about the economy and their finances, compared to a year ago. While 67% indicate they plan to spend the same or more this year, nearly 80% said higher prices could cause them to change their spending in the months ahead. We also found that consumers' use of mobile and online continues to grow across the board. This suggests that digital channels should be one of retailers' strongest competitive plays to capture the consumer, particularly those shoppers keeping an eye on their household budgets."