Consumer Reports Index: Economy Continues to Waiver With Worsening Job Outlook

YONKERS, N.Y., Sept. 14 /PRNewswire-USNewswire/ -- Consumer difficulties are declining, but the economy continues to waiver, with a worsening job picture and declining retail activity, according to the Consumer Reports Index for September.  

The U.S. job outlook remains bleak, the September results for the Consumer Reports Employment Index marks a two-month decline, down in September to 49.1 from 50.2 in August.  The share of Americans claiming to have started a new job in the past 30 days is 5.0%, versus 5.9% in August, and down from July's recent high of 7.8%. Job losses in the past 30 days were up, 6.9%, from August, 5.6%.  Results show that younger Americans between the ages of 18-34 years have been hit the hardest by job losses (13.7%).

Americans are continuing to pull their purse strings tight.  The Consumer Reports Retail Index for August continues to decline. The Past 30-Day Retail Index for September is at 9.8, down significantly from last month's 11.4. September marks an overall decline from a year ago when the Past 30-Day Retail Index was at 11.0, and is at its lowest level since November 2009 (9.0).  September's Next 30-Day Retail Index is at 7.6, down from August (8.1), as well as a year ago (8.8).  Per capita spending in the past 30 days is down to $185, from $286 in August.

The economy remains unsteady and Americans are cautious, but the Consumer Reports Trouble Tracker continues to show positive developments.  It has declined to 53.7 from 56.6 in August, and has posted three months of declines from its recent high in June (63.5).  The Trouble Tracker has improved from this time last year when it was at 68.7, a 15-point drop. Positive developments this month were led by a decline in consumers losing or facing reduced healthcare coverage, to 6.7% from 9.7% in August.

As the Trouble Tracker improves, Americans' outlook has yet to brighten.  The Consumer Sentiment Index has gradually slipped over the past two months and is currently at 44.1, continuing a slide from July (45.2). This index has changed little since October 2008 when it stood at 45.3.

"The recovery faces serious challenges and is at risk of stalling," said Ed Farrell, a director of the Consumer Reports National Research Center. "Job creation remains the greatest challenge. The growth in the ranks of the employed remains anemic and will dampen consumer outlook moving forward.  Americans have not seen any real improvement in their financial situation since the recession hit and this is reflected in our Sentiment Index, which has been in negative territory for the last two years."

The Consumer Reports Index report, available at www.ConsumerReports.org, comprises five key indices: the Sentiment Index, the Trouble Tracker Index, the Stress  Index,  the  Retail  Index, and  the Employment Index. Here are the key findings:

Consumer Reports Sentiment Index: 44.1

• Consumer Reports Sentiment Index has gradually declined from 45.2 in July to 44.1 in September.  The most optimistic consumers are between the ages of 18-34 (49.9), along with households with an income of $100,000+ (50.7).  The most pessimistic consumers are between the ages of 35-64 (42.3) or age 65+ (41.1), and households with an income less than $50,000 (40.4).

The Consumer Reports Sentiment Index captures respondents' attitudes regarding their financial situation, asking them if they are feeling better or worse off than a year ago. When the index is greater than 50, more consumers are feeling positive about their situation. When it is below 50, more consumers are feeling worse. The Sentiment Index can vary from a high of 100 to a low of 0.

Consumer Reports Trouble Tracker Index: 53.7

• The Consumer Reports Trouble Tracker Index has shown a decline this month, pointing to fewer troubles for consumers, dropping to 53.7 in September from 56.6 in August, and is down substantially from a year ago (68.7).
• Positive developments were led by a decline in consumers losing or facing reduced healthcare coverage, to 6.7% from 9.7% in August; a drop in the proportion of Americans unable to afford medical bills or medications (13.6%), down from 15.4% in August, and a slight reduction in the proportion of Americans that faced negative changes to their credit cards, down to 7.2% from 8.9% in August.
• The most common difficulties faced by Americans are:
  • Unable to afford medical bills or medications (13.6%), down from 15.4% in August
  • Missed payment on a major bill – not mortgage (9.3%), down from 10.2% in August
  • Credit card increased rates/fees, reduced credit line (7.2%), down from 8.9% in August
• Lower-income households, earning less than $50,000 a year, have been disproportionately affected. In the past 30 days:
  • 22.4% Have been unable to afford medical bills or medications
  • 16.1% Missed payment on a major bill – not mortgage

The Consumer Reports Trouble Tracker focuses on both the proportion of consumers that have faced difficulties as well as the number of negative events they have encountered. The negative events include: the inability to pay medical bills or afford medication, missed mortgage payments, home foreclosure, interest-rate increase, penalty fees, reduced lines of credit or other changes in credit-card terms, job loss or layoffs, reduced healthcare coverage, or the denial of personal loans. The Consumer Reports Trouble Tracker Index is then calculated as the proportion of consumers that have experienced at least one of the negative events comprising the index multiplied by the average number of events encountered.

Consumer Reports Retail Index: Past 30-Day – 9.8, Next 30-Day – 7.6

• Consumer Reports Past 30-Day Retail Index for September, reflective of August activity, is at 9.8, down from the prior month (11.4). Per capita spending for the past 30 days was down significantly for September, reflecting August activity, to $185, from $286 the prior month.
• The proportion of Americans buying across categories in the past 30 days showed the greatest declines in small appliances (16.6%, down 3.7% points), personal electronics (21.4%, down 3.5% points), and major home electronics (10.7%, down 2% points).
• Among the non-index categories, past 30 day purchases, reflecting August activity, were down slightly for new cars (1.7%) versus the prior month (2.2%), but up for used cars (5.1%) from the prior month (3.7%). Home purchases were up slightly in September (2.5%) relative to August (1.6%).
• Consumer Reports Next 30-Day Retail Index, reflective of planned purchases for September, is at 7.6, down from the prior month (8.1) as well as one year ago (8.8).  
• Among the non-index categories, next 30 day planned purchasing points to new cars declining slightly, 2.5% versus 3.1% the prior month, and used cars also moving downward to 3.5% from 4.3% for August. Planned purchasing for homes in the next 30 days, reflecting September activity, is on par with the prior month (1.5%).

The Consumer Reports Retail Index looks at consumer purchases in the past 30 days as well as the outlook for planned purchases in the next 30-days across several categories. The Consumer Reports Retail Index represents the proportion of respondents that made a purchase in the following categories: major home appliances, small home appliances, major home electronics, personal electronics, and major yard and garden equipment. The Retail Index is a weighted calculation. For example, a major appliance is of greater value than a small appliance. Because of their size and frequency, car and home purchases are tracked separately.

Consumer Reports Stress Index: 60.1

• According to the Consumer Reports Stress Index, the level of stress consumers feel they are under (60.1) is unchanged from the prior month (59.4), but down from one year ago (65.4).

The Consumer Reports Stress Index captures attitudes regarding the amount of stress consumers feel compared to a year ago. It asks whether they are feeling more stressed or less stressed. When the Stress Index is more than 50, consumers are feeling more stress and when it is below 50 they are feeling less stress compared to a year ago. The index can vary from 100 (Total Stress) to a low of 0 (No Stress).

Consumer Reports Employment Index: 49.1

• The Consumer Reports Employment Index is down in September (49.1) from 50.2 in August, dipping into negative territory.
• Overall labor force activity has slowed considerably in the past month, with significantly fewer Americans claiming to have started a new job in the past 30-days, 5.0% versus 5.9% the prior month.
• Job losses in the past 30-days (6.9%) were up from the prior period (5.6%). Job loses have hit younger Americans age 18-34 the hardest (13.7%).

The Consumer Reports Employment Index examines the change in employment of those that reported starting a new job versus those that have lost their job or were laid off in the past 30 days. An index below 50 indicates more jobs were lost than gained, while a score more than 50 indicates more jobs were gained than lost in the past 30-days.

For more information regarding the Consumer Reports Index visit www.ConsumerReports.org.

The Consumer Reports Index, conducted by the Consumer Reports National Research Center is a monthly telephone and cell phone poll of a nationally representative probability sample of American adults. A total of 1,257 interviews were completed (1,007 telephone & 250 cell phones) among adults aged 18+. Interviewing took place between August 26–August 29, 2010. The margin of error is +/- 2.8 points at a 95% confidence level. The complete index report, methodology, and tabular information are available. Contact: C. Matt Fields, 914.378.2454, [email protected].

SEPTEMBER 2010

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SOURCE Consumer Reports