- Deloitte Declares Gift Card Redemption Day to Encourage Consumers to Redeem Unused Cards and Enable Retailers to Recognize Revenues -

The Deloitte Leading Index of Consumer Spending fell sharply this month, primarily due to continued falling home prices.

"The index continues to be negatively affected by falling home prices," says Carl Steidtmann, chief economist with Deloitte and author of the monthly index. "In addition, stagnating real wage growth is clouding the outlook. On the positive side, the tax burden continued to fall in October and the labor market remained stable, with unemployment rates unchanged, and chain store sales were up in November. We continue to have a modest outlook for the holiday season, and expect continued uncertainty headed into the new year."

The index, comprising four components -- tax burden, initial unemployment claims, real wages and real home prices -- fell to 2.64 percent, from an upwardly revised loss of 3.47 percent a month ago.

"As we near the holidays, it's important to remember that January -- with gift card redemptions and fresh winter merchandise -- will be critical to retailers," says Stacy Janiak, Deloitte's U.S. Retail Leader. "For the holidays and heading into the new year, retailers should continue to be conservative with headcount and inventory. In addition, we recommend retailers declare an official Gift Card Redemption Day, when using a gift card entitles shoppers to a percentage off, a free gift or another promotion. Gift Card Redemption Day will enable retailers to recognize the revenues from unredeemed gift cards, while encouraging consumers to use the gift cards they receive during this holiday season as well as unused cards they have received previously. It's a win-win for everyone."

Highlights of the index, which tracks consumer cash flow as an indicator of future consumer spending, include:

   -- Tax Burden: The tax burden continued to fall in October, but it will
      be some time before this is factored into  consumer spending.
   -- Initial Unemployment Claims: Initial unemployment claims increased
      this month. This is not as much a cause for concern given that the
      unemployment rate remained unchanged and non farm employment increased
      in October.
   -- Real Wages: Growth in real wages stagnated in October at a time when
      inflation was 0.3 percent.
   -- Real Home Prices: Real home prices saw their largest fall this month
      in 2007 and the news from housing continues to remain grim. Existing
      home sales, an indicator of housing demand, fell 1.2 percent over
      September and were down 20.7 percent as compared to the same month
      last year.

About Deloitte

As used in this document, "Deloitte" means Deloitte & Touche USA LLP. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte & Touche USA LLP and its subsidiaries.

Source: Deloitte

Web site:
http://www.deloitte.com/us
http://www.deloitte.com/us/retail
http://www.deloitte.com/us/2007HolidaySurvey