The level of consumer spending output jumped markedly during October due to many factors, according to a report from Deloitte.
There was a noticeable spike in home prices, which showed in many property data reports. This likely contributed to a significant improvement in consumer confidence, according to the firm's Consumer Spending Index. Allison Paul, vice chairman of Deloitte, explained that holiday spending could help improve figures, but this could be dialed back as the new year begins.
The Index showed an increase to 4.02, significantly improved from the 3.54 recorded in September. Economic growth also was tangible during the month, as the tax burden indicator climbed to more than 11 percent. The housing market also witnessed home prices improve. Real estate records noted an 8 percent rise in home sales year-over-year. This was the largest gain in eight years.
"The housing market appears to be recovering after bottoming out, while energy prices have begun to recede and lift some of the pressure on wages, boosting confidence and consumers' willingness to spend," said Carl Steidtmann, chief economist for Deloitte. "This may only be sustainable over the long term if legislative issues are resolved, including the fiscal cliff and debt ceiling, as consumers will start to see their first tax increases at the beginning of the year."
However, there were some issues present in the market. The report explained that initial unemployment claims rose 2 percent in the past 12 months, and jumped to nearly 374,000 during October. September's figure was 371,000. Additionally, real wages declined to $8.68, partly due to price hikes in energy and food.
Consumer confidence continues climb
Consumer spending levels may be partly due to the rising confidence among Americans. According to The Conference Board, confidence continued to jump in October.
The Consumer Confidence Index rose to 72.2 during that month, which was an improvement from the previous month's level of 68.4. Additionally, the Present Situation Index improved to 56.2 from the former figure of 48.7. Expectations also rose in October, to a level of 82.9. The previous month had a level of 81.5.
The report added that more consumers felt business conditions improved in October, while fewer felt the situation was getting worse.