The Deloitte Consumer Spending Index report, which tracks U.S. consumer spending based on four components, improved slightly during April from the month before.
The index rose to 2.07 percent from 1.88 percent in March. The four components comprising the index include tax burden, unemployment claims, real wages and real home prices.
"The Index has been undergoing a mix of changes as housing, energy prices and unemployment tip back and forth each month," said Carl Steidtmann, chief economist and author of the monthly Index at Deloitte. On the positive side some stability in prices over the last two months helped the Index move upward. However, with a jobless recovery, falling incomes and rising savings rates, consumer spending growth may turn sluggish."
When broken down by index components, the report showed the tax burden fell slightly, as a rise in tax refunds boosted household income. The Index also reports an increase in unemployment claims, which grew 12 percent from a year ago.
Meanwhile, the real wages component declined 0.9 percent from the same time last year. Real home prices also fell slightly from the previous month and declined 1.45 percent from a year ago.
Decreased tax burden and a slower decline in home prices were the main drivers for the Index's improvement. Home prices are expected to continue stabilizing as foreclosures remain a factor in the market and home sales level off through the end of the year.
Other factors influencing the Index included an increase in auto sales attributed to a reduction in quality of auto lending.
High seasonal demand also helped to push the Index up for the month, but Deloitte expects that demand to taper off as retailers struggle to sustain their conversion rates and store traffic in the remaining months of the season.
Other economic measures influencing the economy in the first quarter included weak GDP growth, which was up 2.2 percent for the first quarter and is expected to grow only 2.5 percent in the second quarter. A Consumer Price Index gain of 2.5 percent, versus 1.3 percent in the previous quarter, was also reported.
Job growth will be a key factor in the economy throughout the remainder of 2012. The labor market's overall unemployment rate has been declining, falling to 8.3 percent for the first quarter from 8.7 percent in Q4 2011 and 9.1 percent in Q3 2011. However, the increase in unemployment claims may cause a slowdown in the improvements seen in the past few quarters.
