Consumer Reports Index Finds Americans' Economic Difficulties Declining

YONKERS, N.Y., Oct. 12 /PRNewswire-USNewswire/ -- Americans are seeing some real improvements this month, with economic difficulties continuing to decline, an improved retail picture, and modest gains in employment, according to the Consumer Reports Index for October.

The Consumer Reports Trouble Tracker Index has declined for four straight months and now stands at 50.5, down from 53.7 the prior month and down from its recent high of 63.5 in June. Positive developments were led by a decline in consumers unable to afford medical care or medications, to 12.7% from 13.6% in September; and a drop in the proportion of Americans who missed a payment on a major bill (8.7%), down from the prior month (9.3%). On the downside, in the past 30 days, 3.0% reported that they have missed a payment on their mortgage, up from 2.4% in September.

Consumer Reports Past 30-Day Retail Index for October is 9.9, on par with the prior month (9.8), but down from a year ago (10.4). There was a slight increase in consumer purchasing for personal electronics (23.2%, up 1.8% points), and small appliances (18.5%, up 1.9% points). Consumer Reports Next 30-Day Retail Index stands at 7.4, down from the prior month (7.6), capping three months of decline since July (8.5).  Small appliances posted a slight gain in October (11.5) from the prior month (10.6).

The Consumer Reports Employment Index is up slightly this month to 49.5 from 49.1 in September. Overall labor force activity is modest, with fewer Americans claiming to have started a new job in the past 30 days (5.7%), than those that lost their job (6.7%). Job losses (6.7%) were largely unchanged from the prior month (6.9%), while job gains were up slightly (5.7%) from September (5.0%).  The employment index remains in negative territory, with job losses outpacing gains.

Despite improvements, confidence remains low and stress is up. The Consumer Reports Consumer Sentiment Index is currently at 44.8. Sentiment has doggedly refused to enter positive territory (over 50) since it was first measured by the Consumer Reports Index on October 5, 2008 and stood at 45.3. The Consumer Reports Stress Index is up in October to 63.2 from 60.1 the prior month, and is at its highest level since April 2010 when it hit 63.8.

"Americans appear to be experiencing less financial woes, but the key factor continuing to depress consumers is weak employment growth," said Ed Farrell, a director of the Consumer Reports National Research Center.  "The lack of real improvement on the jobs front will dampen any meaningful improvement in economic activity."

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: 44.8

• Consumer Reports Sentiment Index has changed little since October 2009, and now stands at 44.8, unchanged from September (44.1).
• The most optimistic consumers are between the ages of 18-34 (54.3), and those with household incomes of $100,000 or more (51.2). The most pessimistic consumers are between the ages of 35-64 (41.9) and 65 or older (37.2), and those with household incomes under $50,000 (40.9).

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: 50.5

• The Consumer Reports Trouble Tracker Index showed further improvement this month, pointing to fewer troubles for consumers, dropping to 50.5 in October from 53.7 in September, and is down substantially from one year ago (65.5).
• Positive developments were led by a decline in consumers unable to afford medical care or medications, to 12.7% from 13.6% in September; and a drop in the proportion of Americans who missed a payment on a major bill (8.7%), down from the prior month (9.3%).
• On the downside, in the past 30 days, 3.0% reported that they have missed a payment on their mortgage, up from 2.4% in September. The leading problems faced by consumers include:
  • Unable to afford medical bills or medications (12.7%)
  • Missed payment on a major bill – not mortgage (8.7%)
  • Credit card increased rates/fees, reduced credit line (7.6%)
• Lower-income households, earning less than $50,000 a year, have been disproportionately affected. In the past 30 days:
  • Unable to afford medical bills or medications (20.6%)
  • Missed payment on a major bill – not mortgage (14.4%)
  • Credit card increased rates/fees, reduced credit line (10.1%)

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 – 9.9, Next 30-Day – 7.4

• Consumer Reports Past 30-Day Retail Index for October, reflective of September activity, is 9.9, on par with the prior month (9.8), but down versus one year ago (10.4).
• Looking at the category purchases over the past 30 days, there were slight increases logged for personal electronics (23.2%, up 1.8% points) and small appliances (18.5%, up 1.9% points).
• Among the non-index categories for past 30-day purchases, new cars (3.0%) were up slightly versus the prior month (1.7%), but used cars (4.0%) were down from the prior month (5.1%). Home purchases were off slightly (2.0%) relative to September (2.5%).
• Consumer Reports Next 30-Day Retail Index, reflective of planned purchases for October, is at 7.4, posting three months of decline from July's recent high of 8.5, and also is down from a year ago (8.3). Within the Next 30-Day Retail Index, only small appliances posted a slight gain from the prior month.  Among non-index categories, new cars (2.2%) and used cars (3.3%) are holding steady relative to the prior month. Planned purchasing for homes (3.0%) in the next 30 days, reflecting planned October activity, is up versus the prior month (1.5%), and is at its strongest level of the past nine months.

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: 63.2

• Consumer Reports Stress Index is up to 63.2 in October from 60.1 the prior month. Stress has steadily increased over the past two months, and now stands at its highest level since April 2010 (63.8).

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: 49.5

• Consumer Reports Employment Index is up slightly in October (49.5) from the prior month (49.1).
• Overall labor force activity is sluggish, with fewer Americans claiming to have started a new job in the past 30 days, 5.7%, than the 6.7% that lost their job. Job gains were up slightly from the prior month (5.0%).
• Job losses in the past 30 days (6.7%) were largely unchanged from September (6.9%).
• Americans earning under $50,000 have been hit the hardest (10.4%).

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 1,265 interviews were completed (1,014 telephone and 251 cell phone) among adults aged 18+. Interviewing took place between September 30 – October 3, 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].

OCTOBER 2010

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SOURCE Consumer Reports