Despite an improved employment picture, consumers faced increased economic difficulties in their lives, according to the Consumer Reports index for April.
The Consumer Reports Employment Index stands at 50.4 for April, reflective of net job creation in the prior 30 days. This was the first movement of the Employment Index into positive territory since May '09. In the past 30 days, more Americans have started a new job (5 percent) vs. losing their job (4.3 percent). The 5 percent reporting starting a new job is up from 3.5 percent the prior month, but behind the recent high point in September 2009 (6.2 percent).
Despite the employment gains, The Consumer Reports Trouble Tracker Index posted its largest month over month gain, pointing to more troubles for consumers. The Trouble Tracker Index rose to 63.5 in April, up from 52.3 in March and was up substantially over April of last year (55,4). Vs. the prior month, the increase in the Trouble Tracker Index was driven by: missed payment on a major bill – not mortgage (12.5 percent), up 4 percent points; lost or reduced health-care coverage (9.3 percent), up 3 percent points; unable to afford medical bills or medications (16.6 percent), up 2.3 percent points; and, negative changes to credit-card terms like interest rates, penalty fees, etc. (12.1 percent), up 2 percent points. Three of these components of the Trouble Tracker Index have reached their highest level since tracking began last April: unable to afford medical bills or medications, lost or have reduced healthcare coverage, and missed payment on a major bill (not mortgage).
"This month we have the first real sign that we may be seeing the beginning of a meaningful consumer recovery with job creation outpacing losses in the past 30 days. It is going to take many months of employment gains to get the 14.9 million unemployed Americans back to work" said Ed Farrell, a director of the Consumer Reports National Research Center. "Sentiment is going to remain soft as Americans are still being buffeted by economic difficulties, particularly affording healthcare, and keeping pace with debts and credit."
Consumer sentiment remains relatively unchanged from the prior month, 43.7 vs. 44.8, respectively. Sentiment is up modestly from a year ago, 43.7 vs. 41.6, respectively. The level of stress consumers feel they are under (63.8) is up compared to prior month (57.7), and on par with one year ago (63.8), though down from its high point in September (65.4).
The lack of engagement with the economy is reflected in Americans' spending habits. The Consumer Reports Past 30-Day Retail Index for April, reflective of March activity, is at 10.4, virtually unchanged from the prior month (11.1). The Consumer Reports Next 30-Day Retail Index, reflective of planned purchases for April, at 8.3, on par with the prior month (7.3) and up substantially from one year ago (6.7) indicating that confidence may gradually be emerging and real improvement in retail may materialize in the coming months.
The Consumer Reports Index report, available at www.ConsumerReports.org, comprises five key indices: the Sentiment Index, the Trouble Tracker Index, Stress Index, the Retail Index, and the Employment Index. Here are the key findings:
Consumer Reports Sentiment Index: 43.7
Consumer Reports Sentiment Index remains unchanged from the prior month, 43.7 vs. 44.8, respectively. Sentiment is up from a year ago vs. today, but the overall gain has been modest, 41.6 vs. 43.7, respectively. The most optimistic consumers are 18 to 34 years of age (54.4), household income of $100,000+ (51.9). The most pessimistic were households with an income of less than $50,000 (40.8) and Americans 65 or older (35.8).
The 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: 63.5
- The Consumer Reports Trouble Tracker Index addresses both the proportion of consumers that have faced difficulties as well as the number of hurdles they have encountered. This index posted its largest month over month gain climbing to 63.5 in April from 52.3 in March, and was up substantially from April '09 when it stood at 55.4.
- The key financial difficulties faced by consumers this month included:
- Unable to afford medical bills or medications (16.6 percent)
- Credit card increased interest rate, penalty fees, etc. (12.1 percent)
- Missed payment on a major bill - not mortgage (12.5 percent)
- Lost or reduced health-care coverage (9.3 percent)
- Lower-income households, earning less than $50,000 a year, have been disproportionately affected. In the past 30 days:
- Unable to afford medical bills or medications (27.7 percent)
- Missed a payment on a major bill (not mortgage) (18.4 percent)
- Lost or have reduced health-care coverage (13.2 percent)
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, 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 – 10.4, Next 30-Day – 8.3
- Consumer Reports Past 30-Day Retail Index for April, reflective of March activity, is at 10.4, on par the prior month (11.1). The Past 30-Day Retail Index now stands firmly at pre-holiday levels and is unchanged from April 2009 (10.4).
- Looking in detail at the categories comprising the retail index (major appliances, small appliances, home electronics, personal electronics, major yard/garden equipment), the Past 30-Day Retail Index, reflecting purchasing in March vs. the prior month, was flat. The categories with the greatest activity were personal electronics (23.4 percent), down 1.2 percent points; small appliances (18.3 percent), down 0.4 percent points; and major home electronics (11.8 percent), down 1.1 points.
- The Next 30-Day Retail Index for April, reflecting planned purchasing for this month, is 8.3, up slightly from March (7.3) and well above a year ago (6.7). Compared to the prior month, the gainers for April were personal electronics (15.4 percent), up 1.5 percent points; and major yard and
- garden equipment (6.5 percent), up 3.1 percent points.
- Among the non-index categories, past 30-day purchases, reflecting March activity, was down slightly for new cars (2.3 percent) and used cars (4.6 percent). Home purchases were flat relative to March, 1.4 percent vs. 1.5 percent, respectively. April's next 30-day planned purchasing (reflects April activity) points to a slight increase for new cars, 2.1 percent vs. 1.1 percent the prior month. Used cars also are up slightly for April vs. the prior month, 4.2 percent vs. 3.5 percent, respectively.
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 Stress Index: 63.8
The level of stress consumers feel they are under is up compared to prior months and the Consumer Reports Stress Index is now at 63.8 vs. March (57.7) and on par with one year ago (63.8), though down from its high point in September (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: 50.4
The Consumer Reports Employment Index stands at 50.4 for April, reflective of net job losses in the prior 30 days, and was on par with February (49.0). This was the first movement of the Employment Index into positive territory since May '09. In the past 30 days, 4.3 percent reported losing their job vs. 5.0 percent starting a new job.
The Consumer Reports Employment Index examines the change in employment of those that reported starting a new job vs. 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.
