Big4.com Reports on Declining Deloitte Consumer Spending Index

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Falling home prices cause index to slip, but decreasing unemployment offsets somewhat

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The decline in home prices is accelerating and likely to continue. Challenges in the housing market coupled with rising energy prices may weaken household spending power in the months ahead

Big4.com, the premier social networking forum for professionals and alumni of Accenture, Andersen, BearingPoint, Capgemini, Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers has noted the Deloitte Consumer Spending Index slipped last month mostly due to falling home prices and the trend could have some negative consequences.

The index is important as an indicator of future consumer spending and it has four different components: real home prices, initial unemployment claims, tax burden and real wages. Three of the four indicators fell according to the Deloitte index for February that was reported on by Big4.com, with the only bright spot being initial unemployment claims that are down 11.7 percent from a year ago to 377,250.

Carl Steidtmann, Deloitte’s chief economist and author of the monthly Index explained the consequences.

“With the exception of a small improvement in initial unemployment claims, the Index components – including real home prices, the tax burden and real wages -- landed in negative territory,” he said. “The decline in home prices is accelerating and likely to continue. Challenges in the housing market coupled with rising energy prices may weaken household spending power in the months ahead.”

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Kristy Short
Big4.com
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