Deloitte: Stable economic fundamentals keep consumer spending outlook on track

New York -- The Deloitte Consumer Spending Index (Index) dipped slightly in April, primarily due to an increase in the tax rate, while other economic fundamentals remain steady. The Index tracks consumer cash flow as an indicator of future consumer spending.

"Despite a minor backslide in April, the Index has remained stable over the past six months, staying at a level that typically indicates sustained consumer spending in the near term," said Daniel Bachman , senior U.S. economist, Deloitte Services LP. "The employment picture continues to improve gradually, with revisions in the last two months reflecting stronger growth than initially reported. The retail sector – the largest private sector employer – added 29,000 jobs in April, bolstering confidence in the industry and the broader economy, even as the effects of the sequester and tax increases continue to impact consumers."

"The question at the top of retailers' minds is whether the economy will limp along or accelerate during the second half of the year," said Alison Paul, vice chairman, Deloitte LLP and retail & distribution sector leader. "While retailers try to get consumers to warm up to summer merchandise after a cool spring, they are also in the thick of holiday planning and inventory orders.”

Long term, Paul said, retailers should be prepared for continued consumer resilience, but stay vigilant should a skittish consumer return when the debt ceiling debate resumes.  

“Retailers should consider how to most effectively use their stores in combination with mobile and dot com to win in the omni-channel game,” Paul said. “The retailers who plan for scenarios where merchandise is offered both online and in-store while also responding to inventory levels and weather trends with nimble pricing will likely see fewer markdowns and more full-price sales."

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