[dropcap]Y[/dropcap]ONKERS, NY — October’s Consumer Reports Index, a measure of overall consumer financial health, showed some hopeful signs for the economy, but old problems persist.
“As we approach the shoulder of the holiday season, there is some positive movement in retail,” said Ed Farrell, director of the Consumer Reports National Research Center. “However, a strong holiday season will depend on consumers having clear signs that the economy is on the mend, which to this point has been lacking. Weak employment, financial difficulties, and poor confidence overall continue to present a powerful headwind for holiday sales.”
The Consumer Reports Sentiment Index dropped slightly to 47.6, down from 48.8 in September. While sentiment in most major regions in the U.S. remained virtually unchanged, the Northeast dropped 11.3 points to 39.0 after spending August and September in positive territory.
The Consumer Reports Employment Index improved slightly to 50.2, breaking into positive territory (over 50) with past 30-day job gains outpacing job losses by a very slim margin. Even though the past 30-day job gains outpaced job losses, the improvement is tenuous and uneven. Among those households earning less than $50,000, the Consumer Reports Employment Index is still in the red.
The Consumer Reports Trouble Tracker, a gauge of the breadth and depth of financial difficulties among American households, climbed to 49.7. This increase reflects a rise in financial difficulties, including inability to pay for medical bills or medications; lost or have reduced health care coverage; and, missed payments on a major bill other than mortgage.
“This month the Consumer Reports Trouble Tracker showed that in most regions of the country, financial troubles are on the rise,” Farrell added. “Even though we see the overall rate of employment improving, households that earn less than $50,000 a year are struggling to pay bills and find new jobs.”
The retail indicators tracking recent and planned spending moved in a positive direction this month. The Consumer Reports Past 30-Day Retail Index rebounded to 11.3 after hitting a 10-month low in September, led by high-ticket items, including major appliances and major home electronics.
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:
[box_light]Consumer Reports Sentiment Index: 47.6*[/box_light]
• Consumer Reports Sentiment Index is down slightly to 47.6 from last month (48.8) but up from 44.8 one year ago.
• The most optimistic consumers: age 18-34 at 63.8, and households with income of $100K or more at 57.5. The most pessimistic consumers: households with income less than $50,000 (44.2) and those who are age 65 and older (34.5). There was a sharp increase in optimism in consumers age 18-34 while those 65 and older voiced a drop in sentiment.
* 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.
[box_light]Consumer Reports Trouble Tracker Index: 49.7*[/box_light]
• The Consumer Reports Trouble Tracker Index increased to 49.7, which is up from 45.3 the prior month. Financial troubles this month were led by increases in several components: inability to afford medical bills or medications; missed major non-mortgage bill payments; and lost or have reduced healthcare coverage. The Trouble Tracker Index is on par with last October’s 50.5. The financial difficulties that were on the rise in the past 30 days were led by: missed payments on a major bill, other than a mortgage at 10.6%, up from 8.2% in September.
• Lower-income households, earning less than $50,000 a year, have been disproportionately affected. In the past 30 days: 23.0% were unable to afford medical bills or medications; 16.7% missed payment on a major bill (not a mortgage); and, 10.9% lost or had reduced health-care coverage.
* The Consumer Reports Trouble Tracker Index 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 health-care 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.
[box_light]Consumer Reports Retail Index: Past 30-Day – 11.3, Next 30-Day – 9.3 [/box_light]
• Consumer retail activity was up for both past and next 30-day retail sales compared to last month and at this time last year. The Consumer Reports Past 30-Day Retail Index*, reflecting September activity, is 11.3, up from 10.0 the prior month. The Consumer Reports Next 30-Day Retail Index*, reflecting planned purchasing in October; increased to 9.3, up from 8.4 the prior month.
• Taking a closer look at the categories comprising the Consumer Reports Past 30-Day Retail Index, the month’s improvement from September to October was led by gains in major appliances (8.6% vs. 5.8%), and major home electronics (12.3% vs. 11.6%).
• Among the retail categories not included in the index, past 30-day purchases, reflecting September activity, were flat for both new cars at 4.6% and used cars at 6.1%, but up versus a year ago, 3.0% and 4.0%, respectively. Past 30-day home purchasing (1.2%) was down versus last month (2.1%) and from the same period last year (2.0%). Purchasing over the next 30 days, reflecting planned October activity, remains steady for homes and new cars. Planned purchasing for used cars in the next 30 days is expected to rise to 4.9% versus 2.7% the prior month.
* 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
[box_light]Consumer Reports Employment Index: 50.2*[/box_light]
• The Consumer Reports Employment Index rose to 50.2, breaking into positive territory for the first time since July. In the report, 5.0% said they started a new job in the past 30 days, compared with 4.7% that lost their job in the same period.
• Job losses in the past 30 days disproportionately impacted households earning less than $50,000 (7.4%) compared to households earning more than $100,000 (0.4%).
* 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.
[box_light]Consumer Reports Stress Index: 58.3*[/box_light]
• The stress consumers felt declined slightly this month dropping to 58.3 from 60.2 in September.
* 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).
For more information regarding the Consumer Reports Index, visit www.ConsumerReports.org.
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