The Deloitte Consumer Spending Index (Index) increased in June as real home prices and initial unemployment claims continued to improve. The Index tracks consumer cash flow as an indicator of future consumer spending[i].

"Strengthening housing and job markets can have a profound impact on consumers' ability and willingness to spend," saidDaniel Bachman, Deloitte's senior U.S. economist.  "Improvement has been slow but steady month to month, and both housing and employment have regained their footing since last year.  Consumers appear to have adjusted to the effects of higher tax rates and the sequester, which has also helped sustain household spending."

The Index, which comprises four components — tax burden, initial unemployment claims, real wages and real home prices — increased this month to 4.3 from a reading of 4.2 the previous month.  

"Even if consumer sentiment and household finances are on the mend, shoppers still expect a good deal," said Alison Paul, vice chairman, Deloitte LLP and retail & distribution sector leader.  "A cooler than usual spring left some retailers to rely on markdowns to make room for back-to-school items.  Retailers can use attractive offers, one-of-a kind events for children and teens, and promotions to help encourage parents to shop their brands this back-to-school season.  Moreover, retailers should link their marketing messages across their store, mobile, and social channels to get consumers in the door in July and keep the momentum going through the summer." 

Highlights of the Index include:

Tax Burden: The tax rate is up from last year, and is now at 12 percent.

Initial Unemployment Claims: Claims moved down nearly seven percent from May 2012 to 348,000 in May 2013.

Real Wages: Hourly real wages remained relatively flat at $8.81.

Real New Home Prices: Real new home prices climbed 9.2 percent from this time last year to reach $113,833.

For a historical analysis of Deloitte's Consumer Spending Index compared to real consumer spending, visit: www.deloitte.com/us/retail/consumer-spending-index/June2013