The Deloitte Consumer Spending Index rose in May, buoyed by improving real home prices, initial unemployment claims and real wages. The Index tracks consumer cash flow as an indicator of future consumer spending[i].

"Three out of the four components of the Index contributed to an uptick in May and have stayed on a moderate and steady track of improvement over the past several months," said Daniel Bachman, Deloitte's senior U.S. economist.   "The labor market has stabilized, and initial unemployment claims fell nearly six percent since this time last year, while real home prices continued to climb and real wages crept up."

The Index, which comprises four components — tax burden, initial unemployment claims, real wages and real home prices — rose slightly this month to 4.27 from a reading of 4.12 the previous month.  

"Mother nature – rather than the economy or consumers – dealt retailers a wild card this spring,"   said Alison Paul, vice chairman, Deloitte LLP and retail & distribution sector leader.  "Retailers should take a cue from the past year's weather as a reminder of the many volatile and unforeseen factors that may affect their sales.   Predictive modeling and scenario planning can help retailers prepare for potential business disruptions, which can have a profound impact as they head into their busy and profitable back-to-school and holiday seasons."

Highlights of the Index include:

Tax Burden: The tax burden remained flat compared with the previous month, but rose 2.26 percent from last year.

Initial Unemployment Claims: Claims moved down to 343,000 in April, nearly a six percentage point decrease from a year ago.   

Real Wages: Hourly real wages moved up 0.4 percent from the same period a year ago, reaching $8.81.

Real New Home Prices: Real new home prices climbed to $117,329, an 8.5 percent increase from this time last year.