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Consumers feel the Pain of Stalling Job Growth and Stumbling Economy Talk

 

Retail numbers flat in May, but look promising for start of summer

Consumer ReportsYonkers, NY – Overall consumer sentiment remains in negative territory for the second consecutive month. Fading confidence is just one sign that Americans continue to have economic uncertainty with talks of the recovery stumbling, according to the Consumer Reports Index June report.  

The Consumer Reports Trouble Tracker Index, which measures the amount of financial difficulties consumers face, is statistically unchanged from last month. But consumers are still worse off than they were in March and April. Underlying the Trouble Tracker’s problematic movement, nearly one-third of Americans (31.9%) faced one or more financial difficulties, up from the prior month (27.2%).

“The recovery may not have stalled, but consumers are thinking it’s on the brink. They are more cautious, feeling more stress, and are experiencing more financial difficulties than they have been in the past few months,” said Ed Farrell, a director at Consumer Reports National Survey Research Center.

Waning consumer sentiment, a worsening employment picture and an increase in financial difficulties have led to a softer consumer retail picture. The Consumer Reports Past 30-Day Retail Index is at 12.0, unchanged since April. Similarly, the Consumer Reports Next 30-Day Retail Index, reflecting planned spending in June, is at 9.0—relatively flat since January. However, June looks like it may be a promising month for several retail sectors, as planned purchasing of personal electronics is 20%, up from 14.1% a month earlier, and major home electronics stands at 11.2%, up from 9.6% the prior month.

The Consumer Reports Employment Index sits at 50.0, indicating an economy that is merely creating as many jobs as it is shedding. Job growth, which was on an upswing in the past two periods, fell in June. In the past 30 days, 5.4% have started a new job, down from 6.7% a month earlier. Further depressing the Consumer Reports Employment Index was an increase in those losing a job in the past 30 days (5.3%) versus the prior month (4.5%).

“The weakening employment index is one of the most troubling signs this month. A lack of job growth has been a serious impediment to the recovery for the past two years. Just two months ago it was looking promising, but a return to stagnation has the potential to derail the recovery,” Farrell added.  
 
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: 46.2*

  • Consumer Reports Sentiment Index was unchanged from last month (45.7) and is comparable to one year ago at 45.0.
  • The most optimistic consumers: age 18-34 at 56.9, and households with income of $100K or more at 54.8. The most pessimistic consumers: households with income less than $50,000 (42.2) and those who are age 65 and older (36.0).

*  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: 48.6*

  • The Consumer Reports Trouble Tracker Index was unchanged at 48.6 in June, from May’s 48.3. The Trouble Tracker Index is still down substantially from February’s recent high of 58.7.
  • The financial difficulties that were on the rise in the past 30 days were led by negative changes to credit-card terms—increased rates, penalty fees, at 7.2%, which was up from 6.3% in May. Moreover, there was a significant increase in the number of those who reported a missed mortgage payment (2.7%), up from 1.7%. 
  • Overall, the most prevalent consumer trouble remains the inability to afford medical bills or medications, unchanged since last month at 14.0%.
  • Lower-income households, earning less than $50,000 a year, have been disproportionately affected. In the past 30 days: 22.4% unable to afford medical
    bills or medications; 12.2% missed payment on a major bill (not a mortgage); and, 9.1% 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 12.0, Next 30-Day – 9.0*

  • Consumer retail behavior struggles for traction. The Consumer Reports Past 30-Day Retail Index*, reflecting May activity, is 12.0, unchanged from the prior month (11.7). The Consumer Reports Next 30-Day Retail Index*, reflecting planned purchasing in June, is also unchanged, standing at 9.0 versus 8.2 the prior month.
  • Looking in detail at the categories comprising the Consumer Reports Past 30-Day Retail Index, June’s softness was the result of declines in personal electronics (22.1%), down 1.1% points from the prior month; and, major home electronics (12.6%), down 1.0% points from a month earlier. Major appliances (9.4%), was up from May (8.1%), as was major yard/garden equipment at 6.7%, up from 5.1% in May.
  • Among the retail categories not included in the index, past 30-day purchases, reflecting May activity, were up slightly versus the prior month for new cars (3.3% vs. 1.8%), used cars (4.8% vs. 3.9%), and homes (2.5% vs. 1.9%). Planned purchasing over the next 30 days, reflecting June activity across these categories, shows new cars depressed versus the prior month (1.8% vs. 2.4%), and homes down (1.8% versus 2.2%). Planned purchasing for used cars is up in the next 30 days versus the prior month (4.6% vs. 4.0%).

*  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: 50.0*

  • The Consumer Reports Employment Index is down from the previous month, when it stood at 51.1. This shift brings an end to three months of gains. The hardest hit consumers by the Employment Index’s reversal were those in households earning less than $50,000. The Consumer Reports Employment Index among this group was 48.1, while the job picture of more affluent Americans remains in positive territory (above an index score of 50).  

*  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: 59.9*

  • The level of stress consumers feel they are under is comparable to May, when it stood at 60.3.

*  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 1,007 interviews were completed (757 telephone and 250 cell phone) among adults aged 18+. Interviewing took place between June 2nd and 5th. 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. .


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