Mounting Financial Woes Drive Consumer Reports Trouble Tracker Levels to New High
Despite talk that the economy is stabilizing, consumer sentiment levels remain low (40.3), growing slightly from September, as Americans report more financial difficulties, according to the latest Consumer Reports Index Report.
The Consumer Reports Trouble TrackerIndex is a calculated score that focuses on both the proportion of consumers that have faced difficulties and the number of negative events they have encountered. In October, the Trouble Tracker measured a sharp rise to 66.7 from 62.3 in September. This was the greatest increase in the metric since June.
While the percentage of Americans experiencing trouble dropped slightly from 38 percent to 36 percent, the average number of troubles jumped from 1.6 to 1.9 per household. The Trouble Tracker Index continues to trend upward month-over-month from the low of 48.5 in May to a new high in October.
Lower-income households, earning less than $50,000 a year, have been disproportionately affected by the recession. In the past 30 days: 26 percent have been unable to afford medical bills or medications, 12 percent lost their job or were laid off, 12 percent lost or have reduced healthcare coverage and 18 percent missed a payment on a major bill other than a mortgage.
In October, Consumers in the Northeast appear to have a better financial outlook than other parts of the country. Sentiment (42.3) was up 5 points in the region, and the Stress Index (63.7) and Trouble Tracker Index (68.0) levels improved, while the Employment Index (48.9) remained stable. In contrast, families in the Western states indicated a more negative picture. Stress Index levels in the region were up 13.8 points to 80.4 while the Consumer Sentiment Index level dropped even lower to 32.8 from 39.2 in September.
Despite the early efforts by some retailers to focus on the upcoming holiday season, consumers are showing very little intention of increasing their retail buying in the next 30 days. The Consumer Reports Retail Index (9.2) for purchase made in the past 30 days appears to have stabilized over the past three months. However, the Retail Outlook for October (7.6), remains virtually unchanged for the third month in a row.
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