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Consumer Reports Index: Financial troubles grow for middle-income Americans

Consumer Reports Index: Financial troubles grow for middle-income Americans

Financial woes are deepening for middle- and upper-income households, according to this month’s Consumer Reports Index, an overall measure of Americans’ personal financial health.

The Consumer Reports Index comprises five measures: Employment, Retail, Sentiment, Stress, and the Trouble Tracker.

The Trouble Tracker, which looks at the proportion of consumers that have faced financial difficulties and the number of hurdles they’ve encountered, showed that financial troubles were up sharply for a second consecutive month (50.2 from 47.8). The increase was largely due to a significant rise (12.4 percentage points) among middle-income families earning $50,000 to $99,000, and a slight jump (2.4 percentage points) among households earning more than $100,000.

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

The most prevalent financial trouble for all Americans remains the inability to afford medical bills or medications (16.2 percent). Since July of this year, the proportion of Americans unable to afford medical bills or medications has steadily increased, as has the proportion of consumers who have lost jobs in the past 30 days.

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

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The Index’s sentiment measure was unchanged from its negative position last month (47.7 from 47.4). But although sentiment is still mired in negative territory for middle- and lower-income households, more affluent households maintained a tentative, but slightly positive outlook.

“Our numbers suggest the core of the problem remains a weak employment picture,” says Farrell, “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.”

The level of stress consumers reported feeling was unchanged from last month (58.0 from 58.6). 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 to 64 years old (62.5).

One bright spot this month is 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 four 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 Consumer Reports Index, a monthly telephone poll of a nationally representative sample of American adults, is conducted by the Consumer Reports National Research Center. A total of 1,015 interviews were completed between Sept. 27 and 30. The margin of error is +/-3.2 percentage points at a 95 percent confidence level.

Previously:
Last month’s Consumer Reports Index: Confidence in the economy plummets among affluent Americans

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