The Deloitte Consumer Spending Index (Index) declined in September due to a climbing tax burden and continued weakness in the housing market. The Index attempts to track consumer cash flow as an indicator of future consumer spending.

"A small increase in the tax rate coupled with ongoing declines in real home prices is causing a slowdown in the Index," said Carl Steidtmann, Deloitte's chief economist and author of the monthly Index. "While the tax burden remains at historically low levels following last year's cuts associated with the stimulus package, a gradual rise in tax rates is likely to continue. However, continued modest wage growth plus a reversal of the high savings rate could help alleviate the tax pinch on household incomes."

The Index, comprising four components - tax burden, initial unemployment claims, real wages and real home prices - slipped to 4.5 percent, from an upwardly revised gain of 4.8 percent a month ago.

"Americans remain discerning shoppers, but they've also been committed to shaping up their personal balance sheets, even if it meant postponing purchases for a while," said Alison Paul, vice chairman and Deloitte's retail leader in the United States. "Retailers can capitalize on any pent-up demand by delivering a compelling merchandise and value message to entice the consumer who is ready to replenish or even splurge this holiday season."

Tax Burden: The tax burden is moving up slowly. The average tax burden has moved off its lowest level in 40 years, while still low by historical comparisons, is clearly headed higher.

Initial Unemployment Claims: Claims ticked up in the most recent month. Claims have been stuck in a narrow range for nearly a year.

Real Wages: Real wage growth, which had been the biggest contributor to the Index, has seen slower growth from a year ago as high unemployment keeps a lid on wages, while energy prices are pushing up the price level and hurting the real purchasing power of modest wage growth.

Real Home Prices: The housing market deteriorated in the most recent month, as the effects from the expiration of the home buyer credit take hold. Mortgage applications are down, sales activity is slow. Home foreclosures are still very high, creating a lot of excess supply which is depressing prices.