Weak Housing Market Dampens Consumer Spending Outlook

The Deloitte Research Leading Index of Consumer Spending fell this month, due to weakness in the housing market. “Across the country, it was the coldest February since 1994, which contributed to soft retail sales and construction. On top of that, the overall weakness in the housing market continues to be a concern,” says Carl Steidtmann, chief economist with Deloitte Services LP’s Deloitte Research and author of the monthly index. “Unsold housing inventory is high, putting downward pressure on prices,” Steidtmann said.

“Combined with tightening lending standards that are reducing refinancings, the housing situation is having an impact on consumers’ net worth, although rising stock values are picking up some of the slack. However, continued strength in the labor market is providing a boost to wages.” The index, comprising four components — tax burden, initial unemployment claims, real wages and real home prices — fell to 3.06 percent, from an upwardly revised gain of 3.34 percent a month ago. “As Spring begins and the weather improves, retailers will have another chance to meet and surpass customers’ expectations,” added Pat Conroy, a vice chairman of Deloitte & Touche USA LLP and national managing principal of its Consumer Business industry practice. “As our recent research has shown, customers would like in-stock positions for the products they want to buy, as well as available, knowledgeable sales associates to help them locate items and make decisions. Retailers who get it right will earn long-term customer loyalty.” For more information, visit http://www.deloitte.com.

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