The Deloitte Consumer Spending Index edged lower in March, but has remained steady with a reading of more than 4.0 the past five months. The Index tracks consumer cash flow as an indicator of future consumer spending.
The Index, which comprises four components — tax burden, initial unemployment claims, real wages and real home prices — fell slightly this month to 4.12 from a reading of 4.37 the previous month.
"The drastic ups and downs among factors including wages, home prices and unemployment claims have subsided, delivering more stability to the Index, which remains at a level consistent with real personal consumption growth of around 2% at an annual rate," said Patricia Buckley, director, economic policy and analysis, Deloitte Services LP, and author of the monthly Index.
"Rising real home prices and small but steady consumer spending increases are among factors suggesting the country may be poised for growth this year, should the economy avoid negative impacts from Europe's financial troubles or the debt ceiling debate this summer," she added.
Highlights of the Index include:
Tax Burden: The tax burden moved down only slightly from the previous month, but was up 2.01% on a year-over-year basis.
Initial Unemployment Claims: Claims moved down to 355,750 in February, a 3.1 percentage point decrease from a year ago.
Real Wages: Hourly real wages modestly dipped to $8.74 from the previous month, but remain relatively flat from the previous year.
Real New Home Prices: Real new home prices moved up 0.6% to $106,027.
"Consumers have maintained their level of spending in recent months and retailers should be encouraged by the economic signals," said Alison Paul, vice chairman, Deloitte LLP and retail & distribution sector leader.
"However, retailers do not have the wind entirely at their backs this month: Consumers with their tax refunds may be a welcome sight in April, but the month will come without the usual Easter holiday to boost sales," Paul added. "Retailers should simultaneously focus on consumers' pent up demand and tax refunds, coaxing shoppers to leave behind the winter's chill and replace the items that were on the back burner, while giving them a promotional incentive to combine those purchases in the retailer's store."