Consumer Sentiment, Trouble Tracker & Stress Levels Show Slight Improvement

YONKERS, NY — With just a little more than two weeks to go until the traditional Black Friday shopping blitz, consumers are showing more interest in purchasing personal electronics.  One quarter (24.9%) of Americans are planning to buy small or personal electronics this month, up five percentage points from October, according to the Consumer Reports Index.

The Consumer Reports Next-30-Day Retail Index shows that planned retail purchasing for November, was up slightly to 9.0 from 8.3 for the prior month. Planned purchasing of personal electronics in November has surpassed the near-term high in July ‘09 (22.1). Major home electronics ticked up slightly to 10.7 percent from 10 percent in October— its highest level since June.

However, overall the bulk of consumers are reluctant to increase their retail spending habits as we approach the unofficial start of the holiday shopping season. Retail purchases in the past 30 days, as well as the overall outlook for the next 30 days remain soft, with little interest in increasing spending in other areas like appliances, yard and garden tools, cars or new homes.

“While relative stability has returned to the Retail Index, it has not been able to demonstrate growth for three straight periods. With the holiday season fast approaching, this has dire implications for expectations this season,” said Ed Farrell, a director of the Consumer Reports National Research Center.

Overall the Past 30-Day Retail Index fell slightly to 9.0 from 10.4 in October and was significantly behind September (11.0). The Next 30-Day Retail Index stands at 9.0 relatively unchanged over the past 3-months.

The Consumer Reports Sentiment Index appears to be stabilizing, an improvement that coincides with a decline in personal financial difficulties and the Consumer Reports Trouble Tracker has fallen slightly to 62.1 from 65.5 in October and is down significantly from September’s high of 68.7. The Consumer Reports Stress Index stands at 60.5, down slightly from October (62.3) but well below September (65.4). Additionally, the Employment Index is at 49.0 virtually unchanged from October’s 48.4 reflective of a market that is still shedding jobs.

“The economy remains in a precarious position where further decline is possible but is slightly less likely. Unless consumers can see concrete improvements in their lives and retail activity picks up, any near-term recovery is improbable,” Farrell added. 

The Consumer Reports Index report, available at www.ConsumerReports.org, is comprised of five key indices: the Sentiment Index, the Trouble Tracker Index, Stress Index, the Retail Index, and the Employment Index. Here are the key findings:

• Since its recent highpoint of 48.5 in June, consumer sentiment declined to 39.4 in September, on par with its low point in October 2008 (37.8). However, consumer sentiment may have bottomed out this month at 42.2, on par with last month (42.1). The most optimistic consumers are ages 18-34, and in households with income of $100,000 or more.

The Sentiment Index captures respondents’ attitudes regarding their financial situation, asking them if they are feeling better off 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 Retail Index:  Past 30-Day 9.0, Next 30-Day 9.0

• The Past 30-Day Retail Index, which collapsed in August falling to 9.5 from 13.0 in July, stabilized in September (11.0) and remained relatively stable through November (9.0). Similarly, the outlook of planned purchase for November (9.0) has remained stable growing only slightly since September.
• Looking in detail at the categories comprising the retail index past 30-day purchasing was down slightly across all categories for November relative to October ‘09.
• Among retail categories not included in the index (new car, used car, and new home), past 30-day purchases of new cars (reflects October activity) remained unchanged from the prior month and used car purchasing posted 3.9%, down slightly from the prior month (4.4%).
• November’s outlook for planned purchasing is down, with new cars dropping slightly, relative to last month and used cars falling substantially to 2.8% from 4.6% in the prior period. Those planning to buy a home were down (1.4%) versus 2.9% for October.

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 & 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.

• The Consumer Reports Trouble Tracker Index has increased steadily through September reaching 68.7 but has fallen back to 62.1 in November and was down slightly from October (65.5). The key financial difficulties faced by consumers this month included:
  • Credit cards – increased rates, penalty fees, etc. (15.1%).
  • Unable to afford medical bills or medications (13.7%)
  • Missed payment on a major bill (9.2%)
  • Lost or reduced healthcare coverage (7.6%)
  • Lost job (7.1%)

The Consumer Reports Trouble Tracker 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, penal fees, reduced lines of credit or other changes in credit-card terms, job loss or layoffs, reduced healthcare 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 Stress Index: 60.5

• The level of stress consumers are feeling is trending down in conjunction with Consumer Reports Trouble Tracker. The Stress Index stands at 60.5 this month down slightly from October (62.3) and significantly improved since September when it stood at an all-time high of 65.4.

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).

Consumer Reports Employment Index: 49.0

• The Employment Index stands at 49.0 for November reflective of net job losses in the prior 30 days. In the past 30 days 7.1 percent or Americans reported losing their job versus 5.1 percent who reported starting a new job.

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.

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 1,251 interviews were completed (1,001 households, 250 cell phone) among adults aged 18+. Interviewing took place between October 29 and November 1, 2009. The margin of error is +/- 2.8% points at a 95% confidence level. Complete index report, methodology, and tabular information available. Contact: C. Matt Fields, 914-378-2454, cfields@consumer.org.