This month the economic outlook of consumers darkened markedly. The Consumer Reports Index fell to 43.4, down from 48.5 last month. The Consumer Sentiment Index, one of the five indices that make up the overall index, fell sharply to its lowest level since December, 2009.
The Trouble Tracker Index, a gauge of breadth and depth of financial difficulties among American households, jumped to its highest level since June, 2010. Increases in financial difficulties were seen across a broad range of individual issues, ranging from missed mortgage payments to lost or reduced healthcare coverage. Not surprisingly, the Stress Index rose to 63.6 in August, up significantly from the prior month and now is at its highest level in 16 months.
The Employment Index fell to its lowest level since March 2010. “Too many households are feeling financial pain and more jobs were lost than created. Unfortunately, the burden of this bad economy has fallen on the households that earn less than $50,000 a year. They’re the ones having trouble finding new jobs, paying bills and affording health care,” said Ed Farrell, a director of the Consumer Reports National Research Center said. “The Consumer Reports Index shows no clear signs pointing to an economic recovery any time soon.”
No region of the country was spared. The North Central, South and Western states showed the greatest rise in financial difficulties reflected by the Trouble Tracker Index, and the employment picture was particularly glum in the South and West. Stress was up notably in the Northeast, North Central, and Western regions.
August’s Sentiment Index, which captures respondents’ attitudes regarding their financial situation versus last year, fell to its lowest level since December 2009 and registered its sharpest drop in two years, as recent events in Washington about the debt ceiling debate fixed attention on the weak economy.
“The debt ceiling debate in Washington focused the consumer’s attention fully on the dire state of the economy, leaving many in a dispirited mood,” said Farrell. “Americans are facing real financial difficulties due to weak employment, which is a key impediment to an economic recovery. This is reflected in nearly every measure of the consumer’s experience.”
The retail indicators tracking recent and planned spending were the only measures to move in a positive direction in August, but they were rebounding from feeble levels in July.
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 1,006 interviews were completed (756 telephone and 250 cell phone) among adults aged 18+. Interviewing took place between July 28 and 31. The margin of error is +/- 3.2 percentage points at a 95% confidence level.