The Index attempts to track consumer cash flow as an indicator of future consumer spending.
"Cyclical increases in the unemployment claims may continue to deter improvements in consumer spending," Steidtmann said. "Home prices remain a big drag and have pulled the index value down by more than one percent."
"Rather than wait for the market to rebound, retailers should implement a 360-degree review of their businesses and look for ways to promote faster selling and higher margin merchandise, as well as look for ways to deliver a more compelling customer experience," said Stacy Janiak, the U.S. retail sector leader at Deloitte. "While cost control is important, a retailer who can invest and focus on the long term during a downward cycle will position themselves for great rewards when customer sentiment ultimately rebounds."
Highlights of the index:
- Tax Burden: Despite weak growth, the tax burden on consumers continues to rise slightly as inflation pushes more households into higher tax brackets.
- Initial Unemployment Claims: The year-on-year growth rate in unemployment claims rose in February and is likely to be higher in March. With the growth in current claims continuing to trend upward, there is likely to be increased pressure on consumer spending.
- Real Wages: Real wage growth was sharply negative as a weak labor market couples with rising prices for food and energy to undercut real wages.
- Real Home Prices: House prices fell by 11 percent in February. Home mortgage refinancing has all but disappeared, reducing household cash flow. While inventories of unsold homes have improved slightly, rising foreclosures and a tighter mortgage market will keep downward pressure on prices.
