Consumer Reports Index: Consumer Outlook Rises With Improvements in Employment, Sentiment and Stress

Strong Holiday Activity Shows Americans were Willing to Engage and Spend, But for How Long?

YONKERS, N.Y., Jan. 17, 2012 /PRNewswire-USNewswire/ -- January's Consumer Reports Index, a measure of overall consumer financial health, showed that the consumer's outlook is improving. Sentiment and employment numbers have climbed, stress levels have diminished, financial difficulties have moderated compared to past months, and the strong retail performance of the holiday season is an important marker that Americans may be willing to engage and spend once again.

January's Consumer Reports Sentiment Index, which measures how consumers are doing financially versus a year ago, was up from last month (45.4) to 48.2. The most optimistic consumers were ages 18 to 34, and households earning $100,000 or more. The most pessimistic consumers were those in households earning less than $50,000 and people ages 65 and older.  

The Consumer Reports Employment Index moved back into positive territory, recovering to 50.6 from 49.6 last month, with past 30-day job gains (6.1%) outpacing job losses (4.8%). However, the improvements in employment were not broad-based. Women, those over the age of 34, and lower-income Americans, in households earning less than $50,000, have lost more jobs than they have gained.

The Consumer Reports Trouble Tracker Index addresses both the proportion of consumers that have faced difficulties, as well as the number of hurdles they have encountered. This Index has remained virtually unchanged for the fourth straight month registering at 50.4 compared to 49.9 in December. Despite stability in the index overall, compared to last month, the proportion of Americans reporting that they have been unable to afford medical bills or medications in the past 30 days was up substantially to 15.7% from 12.8% last month.

"Despite a better economic outlook overall, the strong retail activity this holiday season may lead to a January hangover, with planned spending down from last year," said Ed Farrell, director of the Consumer Reports National Research Center. "Though retail was strong this holiday season, December was a disappointment, with activity lagging last year. The early start of the season by retailers stole December sales and moved them into November."

The Past 30-Day Retail Index for January, reflecting December activity, was 15.0, up from 13.9 last month and on par with this time a year ago. The Next 30-Day Retail Index, reflecting planned spending for January was down to 7.9 compared to 12.7 last month due to the post-holiday slump. December's retail growth was led by strong sales in personal electronics at 35.8%, up from 31.4% last month.

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: 48.2*

• Consumer Reports Sentiment Index for January (48.2) was up from last month (45.4). Though still in negative territory, there is reason to believe with continued improvement in employment that it will break through to positive territory (above 50) within the next couple of months.
• Respondents age 18-34 and households with income of $100K or more remained the most optimistic consumers, while the most pessimistic consumers were households with income less than $50,000 and respondents age 65 and older. 
  • Ages 18-34 were up slightly (55.2) from the previous month (54.5).
  • Households with income of $100,000 or more (57.9) were up for a second straight month from 56.1 in December and 52.8 in November.
  • Households with income less than $50,000 (42.9) rose from 40.3 the prior month.
  • Those who are age 65 and older (40.9) were up from 36.3 in December. 

*  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: 50.4*

• The Consumer Reports Trouble Tracker Index at 50.4 remained virtually unchanged from 49.9 the prior month. Despite the stability in the index overall compared to last month, the proportion of Americans reporting they have been unable to afford medical bills or medications in the past 30 days was up substantially to 15.7% from 12.8% last month, which in turn was the most prevalent consumer trouble in January.
• Lower-income households, earning less than $50,000 a year, have been disproportionately affected. In the past 30 days: 22.7% were unable to afford medical bills or medications; 15.0% missed payment on a major bill (not a mortgage); and, 11.9% lost or 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.

Consumer Reports Retail Index: Past 30-Day – 15.0, Next 30-Day – 7.9*

• Due to holiday spending, retail activity increased again over the past 30 days, while projected spending over the next 30 days is down, reflecting the post-holiday slump. The Consumer Reports Past 30-Day Retail Index*, reflecting December activity, was 15.0, up from 13.9 the prior month but was flat compared to last year.  The Consumer Reports Next 30-Day Retail Index*, reflecting planned purchasing in January, decreased to 7.9 from 12.7 in December.
• Taking a detailed look at the Consumer Reports Past 30-Day Retail Index, December's gain in spending was driven by an increase in personal electronics (35.8%), up from 31.4% last month.
• At 7.9, the Consumer Reports Next 30-Day Retail Index was down from last month (12.7), but was on par with last January (8.3). The January slump reflects declines across all categories, but most notably personal electronics, dropping to 16.3% from 31.5% a month earlier.
• Among non-index categories, past 30-day purchases, reflecting December activity, were flat versus last month for new cars at 2.6%, used cars at 4.5% and home purchasing at 2.4%.
• Purchasing over the next 30 days, reflecting planned January activity, remained unchanged for new cars (1.8%), used cars (3.3%), and homes (1.1%).

*  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 Employment Index: 50.6*

• The Consumer Reports Employment Index moved back into positive territory this month to 50.6, with the past 30-day job gains (6.1%) outpacing job losses (4.8%).
• The Employment Index posted its strongest advances in the North Central and West regions, but did not change in the South or North East.

*  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.

Consumer Reports Stress Index: 56.0*

• The level of stress that consumers feel was down this month and is at its lowest level of the past year. This month's Stress Index dropped to 56.0 from 61.6 in December. Those feeling the most stress were women (58.4), those in households earning less than $50,000 (57.5), and those living in the North East (58.1). 

*  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.

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 1,014 interviews were completed (764 telephone and 250 cell phone) among adults aged 18+. Interviewing took place between January 5 and January 8. 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].

JANUARY 2012
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SOURCE Consumer Reports