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Consumer Spending Gauge Takes Hit as Home Prices Slow

After a fairly flat February, Deloitte’s gauge of consumer spending declined a substantial half a point in March, the business advisory company reported.

The Deloitte Consumer Spending Index, a measure of consumer cash flow as an indicator of future spending, fell from a revised reading of 4.03 in February to 3.51 in March.

Despite the drop, Deloitte maintains that conditions remain positive for consumers.

“The outlook for consumer spending remains healthy,” said Daniel Bachman, senior U.S. economist for the firm, adding, “The Index declined primarily due to a slower increase in median home prices.”

Real new home prices—just one of the index’s four components—climbed slightly over the month to $111,000 and were up a paltry 0.8 percent over the year. That bump is down from a 5.5 percent increase in the 12 months leading up to January.

“While housing prices are cooling off a bit, possibly due to the weather, there is no indication that the inventory of houses for sale has suddenly picked up,” Bachman added.

Indeed, though Realtor.com revealed in a recent report that its national inventory was up 5.6 percent month-over-month in March, the company also noted that more local markets indicated a drop in supply, and a slowdown in new for-sale homes may be coming.

Meanwhile, Deloitte’s other spending gauges were mostly mixed. According to the company, the nation’s tax burden held steady in March for the fourth straight month at 11.8 percent, real wages showed a gradual year-over-year increase to $8.86, and initial unemployment claims came in down from last year but up from February.

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