The consumer’s outlook is improving, according to the January Consumer Reports Index, a measure of overall consumer financial health. The study reports that stress levels have diminished, financial difficulties have moderated compared to past months, and the strong retail performance of the holiday season is an important marker that Americans may be willing to engage and spend once again.
The Consumer Reports Index captures respondents’ attitudes, asking 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.
The study, which measures how consumers are doing financially versus a year ago, was up from last month (45.4) to 48.2:
- The most optimistic consumers were ages 18 to 34, and households earning $100,000 or more
- The most pessimistic consumers were those in households earning less than $50,000 and people ages 65 and older
Past 30-day job gains (6.1%) outpaced job losses (4.8%). However, the improvements in employment were not broad-based. Women, those over the age of 34, and lower- income Americans, in households earning less than $50,000, have lost more jobs than they have gained
The index of both the proportion of consumers that have faced difficulties, as well as the number of hurdles they have encountered, has remained virtually unchanged for the fourth straight month registering at 50.4 compared to 49.9 in December.
The Next 30-Day Retail Index, reflecting planned spending for January, was down to 7.9 compared to 12.7 last month due to the post-holiday slump. December’s retail growth was led by strong sales in personal electronics at 35.8%, up from 31.4% last month, says the report.
The Sentiment Index for January (48.2) was up from last month (45.4). Though still in negative territory, there is reason to believe with continued improvement in employment that it will break through to positive territory (above 50) within the next couple of months.
Respondents age 18-34 and households with income of $100K or more remained the most optimistic consumers, while the most pessimistic consumers were households with income less than $50,000 and respondents age 65 and older:
- Ages 18-34 were up slightly (55.2) from the previous month (54.5).
- Households with income of $100,000 or more (57.9) were up for a second straight month from 56.1 in December and 52.8 in November.
- Households with income less than $50,000 (42.9) rose from 40.3 the prior month.
- Those who are age 65 and older (40.9) were up from 36.3 in December.
The Trouble Tracker Index at 50.4 remained virtually unchanged from 49.9 the prior month. Despite the stability in the index overall compared to last month, the proportion of Americans reporting they have been unable to afford medical bills or medications in the past 30 days was up substantially to 15.7% from 12.8% last month, which in turn was the most prevalent consumer trouble in January.
- Lower-income households, earning less than $50,000 a year, have been disproportionately affected. In the past 30 days: 22.7% were unable to afford medical bills or medications; 15.0% missed payment on a major bill (not a mortgage); and, 11.9% lost or reduced health-care coverage.
The next 30 day Retail Index at 7.9 was down from last month (12.7), but was on par with last January (8.3). The January slump reflects declines across all categories, but most notably personal electronics, dropping to 16.3% from 31.5% a month earlier:
- Among non-index categories, past 30-day purchases, reflecting December activity, were flat versus last month for new cars at 2.6%, used cars at 4.5% and home purchasing at 2.4%.
- Purchasing over the next 30 days, reflecting planned January activity, remains unchanged for new cars (1.8%), used cars (3.3%), and homes (1.1%).
The Retail Index represents the proportion of respondents that made a purchase in major home appliances, small home appliances, major home electronics, personal electronics, and major yard and garden equipment.
The Stress Index at 56.0 is at its lowest level of the past year. Those feeling the most stress were women (58.4), those in households earning less than $50,000 (57.5), and those living in the North East (58.1).
For more information on the Consumer Reports Index, please visit here.