Tag Archives: tax burden
NEW YORK, Dec. 15, 2011 — The Deloitte Consumer Spending Index (Index) slid again in November, weighed down primarily by the housing market. The Index tracks consumer cash flow as an indicator of future consumer spending.
“A high number of foreclosed homes and mortgage defaults continue to deflate real home prices and further lower consumers’ net worth,” explained Carl Steidtmann, Deloitte’s chief economist and author of the monthly Index. “In recent months however, consumers have sustained their spending and the savings rate has declined, while real wages and employment growth remain stagnant.”
The Index, which comprises four components — tax burden, initial unemployment claims, real wages, and real home prices — fell to 1.75 from an upwardly revised reading of 1.96 the previous month. The Index is at the lowest level since April 2009.
“Many consumers are showing seasonal cheer when it comes to holiday shopping; however, they are also well-informed and making calculated decisions before buying,” said Alison Paul, vice chairman and U.S. retail & distribution sector leader, Deloitte LLP. “Retailers are increasing their staffing levels to provide a positive in-store experience and help consumers with their holiday shopping lists.”
“The retail sector added more people to their payrolls last month, showing the strongest November increase in retail jobs since 2007. With more associates in the stores to provide one-on-one customer assistance, retailers may be able to increase shoppers’ basket size and conversion rates during an otherwise competitive season,” Paul added
Highlights of the Index include:
Tax Burden: The tax burden rose slightly to 11 percent. While a rising tax burden is typically a sign of an improving economy, in this case it is likely more of a drag on spending as state and local governments began increasing taxes to address budgetary shortfalls.
Initial Unemployment Claims: Initial unemployment claims moved slightly lower to 405,200 after hovering around the 400,000 mark the past six months.
Real Wages: Real wage growth was stagnant this month as energy prices eased.
Real Home Prices: Real home prices fell sharply again this month and are down on average over the past three months 5.9 percent from a year ago. The housing market appears to be contracting despite record low mortgage rates and the Federal Reserve’s effort to drop them even further.