Real Estate Central

NEW YORK, July 11 /PRNewswire/ — The Deloitte Research Leading Index
of Consumer Spending fell in July, continuing the decline the Index has
experienced since October 2007. The Index attempts to track consumer cash
flow as an indicator of future consumer spending.

“House prices, which are down 10 percent in real terms from a year ago,
are the biggest drag on the Index,” said Carl Steidtmann, chief economist
with Deloitte Research, a subsidiary of Deloitte Services LP, and author of
the monthly Index. “In addition, unemployment claims rose and real wages
were hit by rising energy and food prices. On the plus side, consumer cash
flow got a boost from the first installment in tax rebates.”

The Index, comprising four components — tax burden, initial
unemployment claims, real wages and real home prices — fell to 1.46
percent, from a revised gain of 1.64 percent a month ago.

“It appears that many consumers have chosen not to spend their federal
income tax rebate checks, and rather have put the money into savings or
used it to pay off debt,” said Stacy Janiak, Deloitte’s U.S. Retail leader.
“As a result, retailers still have an opportunity to encourage consumers to
use this increased liquidity in July and August as we head into the
back-to-school shopping season. Retailers who have the right merchandise
mix and carefully manage price points and promotions may be best positioned
to capitalize on this opportunity.”

Highlights of the index include:

— Tax Burden: Despite weak growth, the tax burden fell sharply this
month as the U.S. Treasury sent out the first round of rebate checks. The
sharp rise in the savings rate to 5 percent shows that the bulk of the
rebate money was not spent, but rather was put into savings or used to pay
off debt. This may provide consumers with more liquidity in the fall and
could stimulate back-to-school spending.

— Initial Unemployment Claims: Unemployment claims continue to rise
and are up more than 20 percent from a year ago. With more layoffs
expected, claims could trend higher.

— Real Wages: Real wage growth is being hit by a weak labor market and
sharply higher prices for food and energy. Until energy prices break, real
wages are expected to be a drag on future spending.

— Real Home Prices: House prices fell by 10 percent in May compared
with May of last year. Home mortgage refinancing has all but disappeared,
reducing household cash flow. Inventories of unsold homes, while down
slightly, are still quite high. A contraction in mortgage credit is
limiting home buying. Until home prices stabilize, housing will remain a
drag on consumer spending.

For more information about Deloitte’s Retail sector, please visit
http://www.deloitte.com/us/retail

About Deloitte

As used in this document, “Deloitte” means Deloitte LLP and Deloitte
Services LP, a subsidiary of Deloitte LLP. Please see
http://www.deloitte.com/us/about for a detailed description of the legal structure
of Deloitte LLP and its subsidiaries.



Contact:

Laura E. Wilker Daniel Pineyro
Public Relations Account Executive
Deloitte Hill & Knowlton
+1 212 492 2871 +1 212 885 0312
lwilker@deloitte.com daniel.pineyro@hillandknowlton.com

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[Via Real Estate Newswire]