Americans' Financial Woes Lessen, Study Finds
YONKERS, N.Y. -- The latest Consumer Reports Index, an overall measure of Americans' personal financial health, revealed a major decline in the financial difficulties Americans contend with. The index, compiled near the end of last month before the U.S. presidential election and winter holidays, also shows a rise in consumer contentment.
"There is reason for optimism this month, with financial difficulties in decline and sentiment moving upward," said Ed Farrell, director of consumer insight at the Consumer Reports National Research Center. "These are very heartening signs for retailers, especially as we get into the all-important holiday shopping season."
The Consumer Reports Index's trouble tracker, which looks at both the proportion of consumers who have contended with financial difficulties as well as the hurdles they have encountered, declined by 11.5 points to 38.7, its lowest level since first measured in April 2009. The largest improvement (-12.9 points) was among middle-class families who earn between $50,000 and $99,000, although lower-income Americans also saw modest improvement (-5.7 points).
Consumer sentiment pushed into positive territory (50.7), propelled by gains among Americans who earn $100,000 or more, whose contentment improved 6.7 points to 59.7. Lower-income Americans, those earning less than $50,000, also saw a modest 1.7-point rise, although their contentment remained in negative territory at 48.2.
The employment measure of the index also pushed into positive territory (51.5), up from 49.7 the previous month. This improvement was driven by a decline in those who lost a job in the past 30 days, which dropped to 2.7% from 6% a month earlier. In contrast, the share of Americans starting a job in the past 30 days rose modestly to 5.7% from 5.3% the previous month. These numbers indicate that the economy is gaining more jobs than it's shedding. "Job losses fell sharply and more Americans started versus lost jobs. However job starts remain at relatively low levels," Farrell noted. "Continued progress will hinge on increasing job starts over the coming months to sustain gains."
The next 30-day retail measure, reflecting planned activity in November, showed gains across most categories compared to last month. This was led by items that are usually popular as holiday gifts such as personal electronics (21.4, up from 15.9 the previous month) and small appliances (13.8, up from 9.3). However, planned spending this month lags the year-ago figure, suggesting challenges for retailers. Moreover, planned spending among nonindex categories decreased for new cars (1.8, down from 3) and houses (1.8, down from 2.5), but was up slightly for used cars (3.5, up from 2.8).
The level of stress that consumers reported was almost unchanged, 57.8 compared to 58 the month before. The Americans feeling the most stress in the past 30 days were those in households who earn less than $50,000 (60.6) and those in the Northeast (62.9) bracing themselves for Hurricane Sandy and adults 65 and older (59.3).
The Consumer Reports Index is conducted monthly by the Consumer Reports National Research Center.
Published by The Business Journal, Youngstown, Ohio.