New York City The Deloitte Research Leading Index of Consumer Spending improved in December, primarily due to a sharp decline in energy prices that in turn is giving a boost to real wages.
The Index tracks consumer cash flow as an indicator of future consumer spending.
“Falling energy and food prices are giving a boost to consumer purchasing power, and are offsetting some of the decline in house prices,” said Carl Steidtmann, chief economist, Deloitte Research, a subsidiary of Deloitte Services LP. “In addition, if the new administration’s stimulus plan includes a tax reduction, as expected, that would improve our outlook for consumer cash flow and spending. At the same time, the deterioration in the labor market continues to be a key concern, and clearly there are still many economic issues that need to be addressed.”
The Index, comprising of four components — tax burden, initial unemployment claims, real wages and real home prices — posted a 0.3% gain, up from a revised decline of -0.05% in November.