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Consumer Spending Gauge Perks Up After March Drop

American-flag-moneyAfter experiencing a substantial drop in March, consumer spending increased marginally in April, thanks to ongoing improvements in labor and home prices.

In its most recent monthly release, Deloitte reported a slight rise in its Consumer Spending Index, which measured 3.88 as of the end of the month. March's index had registered 3.51, reflecting a drop of more than half a point from the month prior.

The index tracks consumer cash flow as an indicator of future spending.

"Real consumer spending has held up in recent months, and the outlook continues to remain positive," said Deloitte senior U.S. economist Daniel Bachman.

Bachman said April's improvement stemmed from a decrease in initial unemployment claims, which were down 4.8 percent month-over-month. Also contributing was a 10.9 percent pickup in real median new home prices, which came to $123,000.

Meanwhile, real hourly wages were an estimated $8.83, up 1.0 percent compared to a year ago but down 0.3 percent from March.

The tax rate—the fourth and final index component—was flat, holding steady at 11.8 percent for the fifth straight month.

While April's increase only made up for about half of March's drop, Bachman says the indicators look promising.

"The decrease in the employment insurance claims was confirmed by the favorable April employment figures," he said. "Coupled with steady home prices, this will lift consumers' ability and willingness to spend."


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