Forecasting & Demand Planning

Deloitte Research’s Leading Index of Consumer Durables Spending declined in December 2007 for the fourth consecutive month—further evidence that the U.S. economy is in for a rough ride in 2008. Deloitte’s benchmark is actually brand new, although the firm has applied its insights retroactively to prior periods. It found that the index would have accurately forecasted changes in personal-consumption spending on durable goods 72 percent of the time between January 2004 and July 2007. “The index turned negative in September 2007 and has declined ever since, with an especially steep decline in December,” said Ira Kalish, director of global economics and consumer business with Deloitte Research. When the index moves in one direction for two or more months in a row, it has been shown accurately to predict trends in consumer durables spending, he said. “Consequently, the four-month decline in the index suggests that, in the next few months, there will be significant weakness in consumer spending on consumer electronics, furniture, appliances, cars, home-improvement products and other big-ticket items.”

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