(Adds chief economist’s comments)
By Nivedita Bhattacharjee
BANGALORE, Dec 9 (Reuters) - A decrease in initial unemployment claims and historically low tax levels in the United States boosted the Deloitte Consumer Spending Index for November to its highest level since 2004, the accounting firm said.
The index, which attempts to track consumer cash flow as an indicator of future spending, rose to 4.63 percent in November from an upwardly revised gain of 4.25 percent in October.
The index -- which takes into account tax burden, initial unemployment claims, real wages and real home prices -- had previously touched a high of 5.62 percent in April 2004, Carl Steidtmann, chief economist with Deloitte Research, a unit of Deloitte Services LP, said.
“Real earnings remain on the rise due to falling prices while the housing market continues to show signs of stabilizing,” Steidtmann said.
The wage growth, coupled with declining initial jobless claims, may give retailers and suppliers reason for optimism, Steidtmann said.
The U.S. economy shed only 11,000 jobs in November, well below the 130,000 loss financial markets had braced for, while the unemployment rate unexpectedly dropped to 10 percent from October’s 10.2 percent, government data showed on Friday [ID:nN04320079].
However, Steidtmann said consumers are still apprehensive about the future, adding, “They have the means to spend, but they seem to be lacking the will to spend.”
Steidtmann also said uncertainty about the economy is resulting in an unprecedented level of savings in the United States.
The Deloitte survey said unemployment claims were down more than 200,000 from their recession peak, while real wages were up 3.9 percent from a year ago.
The average tax burden is at its lowest level in more than 40 years, while the pace of decline in house prices has slowed significantly year-on-year, it said.
Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Mike Miller and Anil D‘Silva)