BedTimes, Web Watch, September 2009

Survey: Consumers more pessimistic, stressed

After improving for several months, consumers’ attitudes about their financial situation have declined and they are feeling more stress, according to the Consumer Reports Index, a five-pronged monthly survey that tracks U.S. consumers’ personal financial experiences, attitudes and activities.

After reaching a low (37.8) last October, the Consumer Reports Consumer Sentiment Index had been rising steadily for several months and stood at 48.5 in June. But it dipped to 43.2 in July and fell to 41.1 in August. The index measures respondents' attitudes regarding their financial situation when compared with the previous year. When the index is above 50, more consumers are feeling positive about their situation. When it is below 50, more consumers are feeling worse.

The Consumer Reports Trouble Tracker Index reached its highest reading in August, 61.7, up from a low point of 48.5 in May and up 2.9 points over July. The index focuses on the proportion of consumers who have faced difficulties, as well as the number of difficulties they have encountered. Such negative events include the inability to pay medical bills or afford medication, missed mortgage payments, home foreclosure, interest rate increase, penalties 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 Stress Index captures attitudes regarding the amount of stress consumers feel compared to a year ago. Overall, the level of stress consumers feel is up. However, since April (63.8), the amount of stress consumers were reporting had steadily declined and was at 57 in June. In July the index kicked up slightly to 58.4 and increased to 63.5 in August, effectively reversing the gains made to date.

The Consumer Reports Retail Index looks at consumer purchases in the previous 30 days, as well as the outlook for planned purchases in the next 30 days across several categories: major home appliances, small home appliances, major home electronics, personal electronics, and major yard and garden equipment.

The decline in consumer sentiment, the increase in problems consumers face and the escalation of stress has taken its toll on the retail index. In August, it declined to 9.5 from 13 in July and purchasing was down in all categories.

The Consumer Reports Employment Index dropped slightly in August to 48 from 49.9 in July, as a result of increased reported job losses and a decline in the reported number of new jobs started. The greatest reported job losses were among those in households earning less than $50,000 (13%) and Latino and nonwhite adults (15%). The index examines the change in employment of those who reported starting a new job versus those who lost jobs or were laid off in the preceding 30 days.

The overall Consumer Reports Index is based on a nationally representative random probability sample of U.S. telephone households. The August index is based on 1,009 interviews and was completed between July 30 and August 2. For more information, check www.consumerreports.org.