The Deloitte Consumer Spending Index slipped lower in February, primarily due to spiraling home prices, which Deloitte identifies as being down more than 12% from a year ago.
‘With the exception of a small improvement in initial unemployment claims, the index components – including real home prices, the tax burden and real wages – landed in negative territory,’ says Carl Steidtmann, Deloitte's chief economist and author of the monthly index. ‘The decline in home prices is accelerating and likely to continue. Challenges in the housing market, coupled with rising energy prices, may weaken household spending power in the months ahead.’
The index tracks consumer cashflow 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 to 1.49 from an upwardly revised reading of 1.88 the previous month. According to Deloitte's analysis, recent developments with negative implications for future consumer spending also include declining real income growth and rising gasoline prices.