Improving housing market helps drive spending in June
NEW YORK — The Deloitte Consumer Spending Index continues to rise, thanks to improvements in the housing market.
The Index, which comprises four components — tax burden, initial unemployment claims, real wages and real home prices — rose to 3.22 from a reading of 3.09 the previous month, representing the fourth consecutive month of growth.
“The housing market is showing signs of recovering, while energy prices continue to decrease, giving a boost to consumer buying power,” explains Carl Steidtmann, Deloitte’s chief economist and author of the monthly Index. “Although consumers are financially stronger, the job market continues to affect their willingness to spend. Additionally, the oppressively hot weather impacting a large part of the country may stifle consumers’ desire to shop.”
According to Deloitte, consumer spending for June was influenced by lower gas prices, offset by unseasonably hot weather; a small decline in jobless claims, although the labor market remains fragile; stabilizing home prices; and expected higher tax rates.
“Retailers can capitalize on changing consumer behavior, such as embracing shoppers’ use of mobile technology in the store,” said Alison Paul, vice chairman Deloitte LLP and retail and distribution sector leader. “Deloitte’s research into smartphones’ influence on retail store sales revealed that smartphone shoppers are 14% more likely to convert in the store. Retailers should provide – not shy away from -- mobile applications to capture consumers’ attention throughout the back-to-school season, particularly as smartphone use for shopping skews to younger consumers.”