Consumer Spending Rises for Second Straight Month

money-fiveConsumer spending indicators rose for a second straight month in September as the labor market showed signs of improvement.

Deloitte released Thursday the results of its latest monthly Consumer Spending Index, which climbed in September to 4.21 from an August reading of 4.11.

The index tracks consumer cash flow through a handful of measures—tax burden, initial unemployment claims, real wages, and new home prices—as an indicator of future consumer spending.

Out of those four gauges, only one improved: Real hourly wages were up 0.5 percent from August to $8.86 in September, Deloitte reported.

Among the other indicators, initial unemployment claims increased to 303,000 last month but remained 10.3 percent down from the same period last year. New home prices also deteriorated slightly, falling 1.4 percent month-over-month to a median $116,000.

Finally, Deloitte’s tax burden measure was unchanged, with the tax rate increasing only marginally to 11.8 percent.

“A rise in real wages boosted the Index this month,” said Daniel Bachman, Deloitte’s senior U.S. economist. “Although unemployment claims remain at the level of the previous month, seeing them continue to hover around the 300,000 mark is a positive sign for the labor market. The uptick in wages—although only of one month’s duration—is also consistent with the improving labor market.

“If employment and wages continue this positive trajectory, consumers are likely to respond with more confidence and higher spending,” he finished.

Author: Tory Barringer October 10, 2014

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