Consumer Reports Index: Confidence In The Economy Plummets Among Affluent Americans

Retail suffers as consumers face a sharp rise in financial woes and weak employment outlook

YONKERS, N.Y., Sept. 6, 2012 /PRNewswire-USNewswire/ -- With two months to go before the national election, the Consumer Reports Index, an overall measure of Americans' personal financial health, saw significant drops in consumer sentiment that were reinforced by a sharp jump in personal financial troubles over the past 30 days. 

The drop in sentiment (47.4 from 49.5 the previous month) was driven by a significant souring among affluent Americans in households earning more than $100,000 (-7.7 pts). While still in positive territory (52.2), sentiment levels for this income group haven't been this close to negative territory in almost two years (October 2010).

The Consumer Reports Index's Trouble Tracker, which looks at both the proportion of consumers that have faced financial difficulties as well as the number of hurdles they have encountered, showed that financial troubles were up sharply (47.8 from 39.8 last month) after several months of improvement. 

Lower-income households earning less than $50,000 faced the greatest amount of financial difficulties overall, but financial troubles rose sharply for more affluent households in the past 30 days. The Trouble Tracker measure among affluent Americans jumped a full 8 points from 17.8 to 25.8, while households under $50,000 remained statistically flat (63.6 from 64.7 the previous month).  

"These numbers suggest that affluent Americans, who have the liberty to engage in discretionary consumer spending, are facing greater troubles and may be less confident about the health of the economy and their personal finances," said Ed Farrell, director of consumer insight at the Consumer Reports National Research Center. 

The Consumer Reports Index's Past 30-Day Retail measure, which tracks consumer purchases in five major retail categories, continued last month's decline (9.0 from 9.4) and is at its lowest level since November 2009.  Looking in detail at the categories composing the Consumer Reports Index's Past 30-Day Retail measure, declines were driven by personal electronics (16.7%, down from 22.2% a month earlier), small appliances (18.2%, down from 20.4% the prior month), and major appliances (5.9%, down slightly from 6.1% last month).

Planned spending for the month of September was also down for all categories that the Consumer Reports Index tracks, most notably: major appliances (6.4%, down from 7.2% last month), major home electronics (8.8%, down from 10.2% a month earlier), and personal electronics (14.3%, down from 16.5% the prior month).

The Consumer Reports Index's employment measure for September remained in negative territory (49.9), statistically unchanged from the prior month. When the number drops below 50, it is indicative of a job market where more Americans are losing rather than starting jobs. The past 30-day, job gains weakened to 4.8% from 4.9% last month, and job losses inched up to 5.1% from 5.0% a month earlier.

The level of stress that consumers reported feeling was up this month to 58.6 from 56.4 the month before. The most stressed Americans in the past 30 days are those with households earning less than $50,000 (60.3), those in the North East region (61.5) and women (60.5).

"Any gains the economy may have made over the summer in the minds of consumers were given back this month," Farrell said. "Declining sentiment, rising stress, increased financial troubles and a sustained weak employment picture are dragging down their outlook and perceptions."

The Consumer Reports Index report, available at www.ConsumerReports.org, 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 1,011 interviews were completed (767 telephone and 250 cell phone) among adults aged 18+. Interviewing took place between August 23 and August 26. The margin of error is +/- 3.2 percentage points at a 95% confidence level. The complete index report, methodology and tabular information are available. Contact: C. Matt Fields 914-378-2454 or [email protected].

SEPTEMBER 2012
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SOURCE Consumer Reports