The Deloitte Consumer Spending Index rose sharply in October, primarily due to the second consecutive and significant increase in new home prices, according to a release. The index tracks consumer cash flow as an indicator of future consumer spending.
"The housing market appears to be recovering after bottoming out, while energy prices have begun to recede and lift some of the pressure on wages, boosting confidence and consumers' willingness to spend," Carl Steidtmann, Deloitte's chief economist and author of the monthly Index, said in a statement.
"This may only be sustainable over the long term if legislative issues are resolved, including the fiscal cliff and debt ceiling, as consumers will start to see their first tax increases at the beginning of the year," he added.
The index rose to a reading of 4.02, up from 3.54 the previous month. The index comprises four components -- tax burden, initial unemployment claims, real wages and real home prices.
"Rising consumer confidence should give retailers reason to celebrate during the holiday season, but the winds may shift in January, which should encourage retailers to make the most of this good news now," said Alison Paul, vice chairman, Deloitte LLP and retail and distribution sector leader.
"The consumers who appear most optimistic about their holiday spending are those who have been coined 'omnichannel' shoppers, or those who use all channels to shop, including mobile phones, online and the store," Paul added.
Omnichannel shoppers "plan to spend 71 percent more on gifts than those who shop only in stores," Paul said, citing Deloitte's annual holiday survey. "We also found that nearly half of consumers plan to shop online."
Factors considered in the index include a rising tax burden, which indicates growth in incomes; slightly higher jobless claims; the downward pressure on wages exerted by rising food and energy costs; and continued upward movement in real home prices.
The Deloitte Consumer Spending Index is a proprietary methodology that analyzes economic factors to gauge consumer cash flow as an indicator of future spending. Deloitte's analysis includes data from the U.S. Commerce Department, Bureau of Economic Analysis, U.S. Bureau of the Census, U.S. Department of Housing and Urban Development and the U.S. Department of Labor.
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