PhotoConsumers were a little freer with their budgets in December.

The Deloitte Consumer Spending Index, made up of four components -- tax burden, initial unemployment claims, real wages and real home prices -- increased to 4.3 from 3.9 in November.

“Economic fundamentals that influence consumer spending moved in a positive direction in the latest Index,” said Daniel Bachman, Deloitte’s senior U.S. economist. “Median home prices increased, while initial unemployment claims continued to fall. Real wages, which have remained stubbornly flat, increased slightly as well.”

Alison Paul, vice chairman, Deloitte LLP and Retail & Distribution sector leader, says Retailers need to keep their foot on the gas in light of the positive signals that suggest improved consumer confidence and spending levels in the months ahead.

“The holiday season underscored that consumers are not only willing to shop, but expect to do so on their time and on their terms,” said Paul. “Retailers can keep up the momentum by targeting consumers across different channels and geographies with more personalized, high-touch connections through mobile and online points of contact that reach a broader swath of shoppers with greater precision.”

Paul says retailers should also consider how to reign in shoppers’ dependence on discounts, through new products, assortment and service that entice shoppers to spend at full price points, to not only drive sales but preserve margins.

Index highlights

  • Tax burden: The tax rate is up now at 11.8%, a 0.6% increase from last month. Believe it or not, that's a positive sign. A rising tax rate is associated with increasing incomes.
  • Initial unemployment claims: Claims were down 14% from the same period last year, falling to 324,000.
  • Real wages: Real hourly wages rose 1.3% from this time a year ago -- to $8.83, showing a second month of accelerated increases.
  • Real new home prices: New home prices climbed to $116,000, an increase of more than 5% from the same time last year.

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