Deloitte index shows lower wages, higher energy costs derail consumer spending
Consumer spending in September fell to its lowest level in two years as falling home prices and plummeting wages kept purchasers on the sidelines, according to accounting giant Deloitte. "Low mortgage rates are doing little to spur home sales as banks limit lending and foreclosures continue to increase," said Carl Steidtmann, Deloitte's chief economist and author of the monthly consumer spending index, which analyzes consumer cash flow to determine expectations for future spending. "The housing market appears to be contracting again despite record low mortgage rates and the Federal Reserve's efforts to push them even lower." Deloitte analysts look at four economic indicators: tax burden, initial unemployment claims, real wages and real home prices. The index fell to 2.39 from 2.51% a month earlier, prompting analysts with Deloitte to project additional cutting back on the consumer's part. Real wages fell sharply in September, dropping 2.3% from a year ago with higher energy prices absorbing a larger portion of employees' paychecks. Write to Kerri Panchuk.