Israeli Diamond Portal Reports :Consumer Spending Down for Fourth Consecutive Month

March 20, 2008 - PRLog -- Consumer spending in the United States has been dropping steadily since September. Deloitte Research, which publishes the Leading Index of Consumer Spending noted that falling home prices and the decrease in hourly earnings have caused a drop in consumer spending.

Deloitte Research’s Chief Economist Carl Steidtmann stated: "Falling home prices pulled the index value down by nearly 1 percent in January. Additionally, a drop in real hourly earnings, due to food and energy inflation, was the second major factor pushing the index south. Rising unemployment remains the biggest risk to consumption expenditure in the months ahead."

Deloitte Research’s index tracks consumer cash flow as an indicator of spending in the coming months. Four components are included in the index, including tax burden, real wages, real home prices and initial unemployment claims.

According to the company, the tax burden declined to 2.6% in January in comparison to the same month last year. This was the only positive data for the month of January. The growth rate of unemployment claims rose in January and unemployment has spread to services from construction and manufacturing.

Real wages dropped in January mainly due to rising energy prices. Housing prices dropped in January alone by 10.5% with no signs of a bottoming out.

DeLoitte LLP Vice President Stacy Janiak noted that the outlook for retailing is worrisome and added: "To succeed in this difficult environment, retailers must be innovative in their approach to both marketing and merchandising."

Website: www.israelidiamond.co.il