Consumer Reports Index: Financial Troubles Grow Worse For Upper- and Middle-Income Americans

Weak Employment May Be Harbinger of Less Spending & Grim Sentiment For Post-Election, Pre-Holiday Shopping

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These signs are troubling for the economy. While lower-income households have never really recovered from the recession, middle- and upper-income Americans have seen improvement and represent the bulk of discretionary spending power.

YONKERS, NY (PRWEB) October 09, 2012

The Consumer Reports Index, an overall measure of Americans’ personal financial health, revealed deepening financial woes a for middle- and upper-income Americans heading into the last three months of the year.

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 for a second consecutive month (50.2 from 47.8 last month). The increase was largely due to a significant rise (12.4 percentage points) among middle-class families earning between $50,000 and $99,000, as well as slight jump (2.4 percentage points) among wealthier Americans earning more than $100,000.

“These signs are troubling for the economy. While lower-income households have never really recovered from the recession, middle- and upper-income Americans have seen improvement and represent the bulk of discretionary spending power. Should this trend continue, retail numbers could suffer if those groups are less willing to engage in spending,” said Ed Farrell, director of consumer insight at the Consumer Reports National Research Center.

The most prevalent financial trouble among all Americans remains the inability to afford medical bills or medications (16.2%). Since July 2012, the proportion of Americans reporting they are unable to afford medical bills or medications has steadily increased, along with the proportion of consumers reporting they lost jobs in the past 30 days.

The Consumer Reports Index’s employment measure (49.7) remains weak overall, with two straight months of increasing job losses. Past 30-day job gains (5.3%) improved slightly from 4.8% last month, but these were offset by job losses in the past 30 days, which rose to 6.0% from 4.9% a month earlier. These numbers reveal that the economy is still losing more jobs than it is creating.

Consumer sentiment remains mired in negative territory for middle- and lower-income households, with only those in affluent households maintaining a tentative, but slightly positive outlook. The Consumer Reports Index’s sentiment measure was unchanged from its negative position last month (47.7 from 47.4 the previous month).

“Our numbers suggest the core of the problem remains a weak employment picture, which results in falling consumer confidence levels. Without a substantial improvement in the jobs outlook, it is unlikely that consumers will have the inclination to spend,” Farrell said.

One bright spot in the results this month was the Consumer Reports Index’s past 30-day retail measure. Reflective of September spending activity, purchases rose to 10.6 from 9.0 in August—a slight uptick after two months of decline. This improvement was driven primarily by gains in major appliances and major home electronics, with personal electronics also contributing. Among larger non-index consumer spending categories, new car purchasing was also on the rebound, showing gains over the past two months.

The level of stress that consumers reported was unchanged from last month 58.0 from 58.6 the month before. The most stressed Americans in the past 30 days are those with households earning less than $50,000 (59.6), those in the South (62.5) and adults 35-64 years of age (62.5).

The Consumer Reports Index report, available at http://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 1,015 interviews were completed (665 telephone and 350 cell phone) among adults aged 18+. Interviewing took place between September 27 and September 30. 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 cfields(at)consumer(dot)org.

October 2012
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Contact

  • C. Matt Fields
    Consumer Reports
    (914) 378-2454
    Email
  • Rachel Zuckerman
    Consumer Reports
    914-378-2417
    Email

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