Consumer Reports Index: Financial Troubles Jump And Sentiment Stumbles For Upper-Income Households

Retail activity remains at weakest point since April 2009

YONKERS, N.Y., July 9, 2013 /PRNewswire-USNewswire/ -- The Consumer Reports Index, an overall measure of Americans' personal financial health, showed that more upper income Americans reported they are facing significantly more  financial troubles than last month. The Consumer Reports Index's trouble tracker measure climbed to 39.2 from 34.0 a month earlier—an increase that was entirely fueled by an epic 23.3-point jump among those households earning $100,000 or more.

The Consumer Reports Index's trouble tracker measure 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 payment; home foreclosure; interest-rate increase, penalty fees, reduced lines of credit or other changes in credit-card terms; job loss; reduced health-care coverage; and, the denial of personal loans.

The Consumer Reports Index's overall consumer sentiment measure remained in positive territory and unchanged from the previous month at 52.0. But those same consumers in households earning $100,000 or more reported a dip in sentiment of 2.5 points, while lower- and middle-income segments were virtually unchanged.

"It's possible the drop in the S&P 500 and NASDAQ indexes, as well as the prospect of rising interest rates may have chilled the outlook for affluent consumers," said Ed Farrell, director of consumer insight at the Consumer Reports National Research Center.         

The Consumer Reports Indexes' past 30-day retail measure showed spending activity slackened to 8.6 from 9.2 a month earlier, and was down from one year ago (9.9). The dip shows consumers are still not comfortable spending. Planned spending for the next 30 days, reflecting potential July activity, remains weak at 6.2, virtually unchanged from last month at 6.0. The planned-spending activity numbers posted for the past two months are the weakest since Consumer Reports first measured them in April 2009.

"The recovery is sluggishly moving forward. This month's reported sentiment setback and increased financial woes may have been promoted by perception rather than reality. The steady, gradual improvement in the employment picture, if maintained, is a very positive sign and may work to resolve the continued weakness in retail as consumer confidence builds," said Farrell.

For the fourth straight month, job gains outpaced job losses. The Consumer Reports Index's employment measure was little changed this month, rising slightly to 50.9 from 50.6 a month earlier. This month was among the strongest in job starts at 7.7%, up from 5.5% the prior month. However, this gain was partially offset by a steep rise in job losses to 6.0% from 4.2% a month earlier.

The level of stress that consumers reported was unchanged at 55.7 from 55.2 last month. The most stressed Americans: women (57.7), those in households earning under $50,000 (58.5), aged 35-64 (57.2), and those in the South (58.0).

The Consumer Reports Index report comprises responses directly from consumers on five key measures: the Sentiment Index, the Trouble Tracker Index, the Stress Index, the Retail Index and the Employment Index.

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 1,010 interviews were completed (660 telephone and 350 cell phone) among adults aged 18+. Interviewing took place between June 27 and June 30. The margin of error is +/- 3.2 percentage points at a 95% confidence level.

JULY 2013

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SOURCE Consumer Reports