The Deloitte Consumer Spending Index declined in April as falling housing prices and rising unemployment claims offset gains from real wage growth, reduced tax burden and lower energy prices. The Index attempts to track consumer cash flow as an indicator of future consumer spending.

"The housing market continues to be the biggest drag on the index, with home prices down nearly 12 percent over the past year," said Carl Steidtmann, chief economist with Deloitte Research, a subsidiary of Deloitte Services LP, and author of the monthly Index. "Although homes are more affordable, price deflation gives potential home buyers an incentive to wait, while also reducing homeowners' ability to extract equity through refinancing. However, there are signs that consumers are starting to get a boost from tax cuts along with tax credits for first time home buyers. This may encourage them to use some of the purchasing power they have accumulated during a period of higher savings rates and wages combined with falling energy costs."

The Index, comprising four components - tax burden, initial unemployment claims, real wages and real home prices - fell to 1.46 percent from an upwardly revised gain of 1.95 percent a month ago.

"While consumers are placing more emphasis on overall value, retailers are likely to find they cannot compete on price alone and should, instead, focus on their relevancy to existing and potential customers," said Stacy Janiak, vice chairman and U.S. Retail leader, Deloitte LLP. "Retailers can use deep insights into what drives the customer to renew and differentiate their brand in a way that will hit the sweet spot between value, price and experience. Those who can quickly and effectively interpret customer data to understand behaviors and then tailor their marketing, merchandise, service offerings and customer experience accordingly will be better positioned to establish lasting, profitable relationships."

Highlights of the Index include:

Tax Burden: The tax burden continues to fall with the weakening of the economy. Tax reduction that goes into effect in April will add to a further reduction in tax burden going forward.

Initial Unemployment Claims: Claims rose again in the most recent month and are up 77 percent from a year ago.

Real Wages: Real wage growth continues to post small gains due in large part to falling prices for energy. Real wages are up 4.3 percent from a year ago and on an annualized basis are up 9 percent over the last eight months as energy prices have given a big boost to consumer purchasing power.

Real Home Prices: Home prices continue to fall. Renewed efforts to forestall foreclosures coupled with a tax credit for home buyers may bring some stability to this market. The decline in home prices has made home buying much more affordable. What is lacking is mortgage financing.