"Some of the rise can be attributed to the seasonal January jump, but not all of it. Overall, consumers are feeling better about their financial situation and hopefully this will translate into increased economic engagement in 2011 if this trend continues," said Ed Farrell, a director of the Consumer Reports National Research Center.
Consumers are facing fewer financial difficulties than they did one year ago. The Consumer Reports Trouble Tracker Index (54.2) is down from last January (58.2). In recent months the Trouble Tracker Index has crept upward, pointing to increasing financial difficulties for consumers. January's Consumer Reports Trouble Tracker Index stands at 54.2, up from 52.7 the prior month and from its recent low in November (49.3).
As the holidays recede, the Consumer Reports Stress Index, a measure of the stress consumers feel in their everyday lives versus a year ago, is down significantly in January to 55.4 from 60.8 the prior month and from one year ago (69.0). Beyond the expected seasonal drop, consumer stress is now at its lowest level since this measure was tracked beginning in April 2009. Though stress is still elevated (above 50) there has been a real improvement among consumers.
Consumer retail spending for December showed modest gains versus one year ago. The Consumer Reports Past 30-Day Retail Index (reflecting December activity) came in at 15.4, up slightly from 14.1 last year despite, consumers' expressing hesitancy to spend in last month's index. December's gains were closely associated with the performance of major home electronics. One-fifth of respondents (20.8%) purchased major home electronics in December, up significantly from last year (15.8%).
Some of December's retail gains were borrowed from January and the out-months. The Consumer Reports Next 30-Day Retail Index for January, reflecting January's activity, is 8.3, down slightly from one year ago (8.9), with personal electronics and major home appliances the hardest-hit categories.
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: 48.7
- Consumer sentiment for January (48.7) is up from last month (45.1) and from one year ago (44.1). Consumer sentiment is at its highest level since first tracked in the Consumer Reports Index (October 2008).
- The most optimistic consumers: Age 18-34 at 57.2 (up from 53.5 the prior month), and households with income of $100K or more at 57.4 (up from 54.5 a month earlier). The most pessimistic consumers: Households with income less than $50,000 at 42.7 (up from 40.2 the prior month), and those age 65 and older at 44.1 (up from 38.7 a month earlier).
Consumer Reports Trouble Tracker Index: 54.2
- Consumers faced more troubles in December this month than November. The index increased to 54.2 in January, up from - December's 52.7, though the Consumer Reports Trouble Tracker Index has improved from one year ago (58.2).
- Negative developments were led by an increase in consumers that were unable to afford medical bills or medications in the past 30 days, to 15.6% from 13.3% in December; and an increase in those that have missed a payment on a major bill (not mortgage), to 10.7% from 9.5% a month earlier.
- Overall, the most prevalent consumer troubles include: Unable to afford medical bills or medications (15.6%); Missed payment on a major bill – not mortgage (10.7%); Lost or reduced health-care coverage (8.6%).
- Lower-income households, earning less than $50,000 a year, have been disproportionately affected. In the past 30 days: 24.9% Unable to afford medical bills or medications; 16.8% Missed payment on a major bill (not a mortgage); 13.4% Lost or reduced health-care coverage; and, 11.6% Lost job, versus 6.5% among all consumers.
Consumer Reports Retail Index: Past 30-Day 15.4, Next 30-Day – 8.3
- The Past 30-Day Retail Index for January (reflective of December activity) is 15.4, up from the prior month (12.4), as well as a year ago (14.1). January's Next 30-Day Retail Index, reflective of planned purchases for January, is at 8.3, and is down slightly from the same period last year (8.9%).
Looking in detail at the categories comprising Consumer Reports Past 30-Day Retail Index, gains are closely associated with the performance of major home electronics. One- fifth (20.8%) purchased major home electronics in December, up significantly from last year (15.8%).
- The Consumer Reports Next 30-Day Retail Index for January, reflecting January's activity, is 8.3, down slightly from one year ago (8.9), with personal electronics and major home appliances the hardest-hit categories.
- Among the non-index categories, past 30-day purchases (December activity) are up for new cars (3.2%) versus a year ago (1.9%), while used cars and home purchasing remained unchanged from the prior year. Planned purchasing in January for used cars (5.9%) was up substantially from one year ago (3.4%); plans to buy a home (0.9%) were down from a year ago (2.2%); and intent to buy a new car (2.4%) was unchanged versus last January.
Consumer Reports Employment Index: 49.2
The Consumer Reports Employment Index remains weak in January (49.2), and is unchanged from the prior month (49.2). In the past 30 days, the proportion of Americans that have lost their job is down to 6.5%, from 7.4% a month earlier. The number of Americans that have started a job in the past 30 days (4.9%) is also down compared to a month earlier (5.7%), and is on par with one year ago (4.7%). The Employment Index points to two groups that have fared worst this month: adults 35 to 64 years of age (48.1), and those in households earning less than $50,000 (47.9).
Consumer Reports Stress Index: 55.4
- The level of stress consumers feel they are under is down to 55.4 from both the prior month (60.8) as well as one year ago (59.0). Stress is now at its lowest level since first measured in April 2009.