Retail spending declined for the fourth straight month even as Americans reported improvements in sentiment, employment, stress, and financial difficulties, according to the latest Consumer Reports Index, a monthly gauge of overall consumer financial health.
The Index's past-30-day retail measure fell slightly to 10.6 from 11.3 and has yet to regain its footing since the end of 2011. At the same time, the Index's sentiment measure rose substantially to 50.6 from 44.6, the highest level in more than two years. Sentiment climbed significantly for the most pessimistic consumers, those in households earning less than $50,000, as well as for Americans earning at least $100,000, who have trended more optimistic for some time now.
"This is the most positive showing for the economy since September 2011 and these broad gains may point to some real improvements," says Ed Farrell, director of market research for the Consumer Reports National Research Center.
The Consumer Reports Index's trouble tracker declined sharply this month, to 44.8 from 54.5, its lowest level in 12 months. The trouble tracker posted its greatest declines among Americans in households earning less than $50,000 as well as among adults with a college education or more.
The Index's employment measure crept into positive territory this month, standing at 50.5, up from 49.3. This gain is not a reflection of a surge in job creation, however, with this month's job starts (5.3 percent) below last month's (5.8 percent). The growth represents a decline in job loss, which fell to 4.4 percent from last month's recent high of 7.1 percent.
Pacing the improvement in sentiment and declines in financial-difficulties measures, the Consumer Reports Index's stress measure dropped to 56.3 from 64.3, its highest reading since September 2009.
"Despite the broad improvements seen this month, unless employment demonstrates a marked upturn, it is unlikely that consumers will feel secure enough to return to their past spending habits to fuel notable growth in the retail numbers," says Farrell.
The Consumer Reports Index report comprises five key measures: the Sentiment Index, the Trouble Tracker Index, the Stress Index, the Retail Index and the Employment Index.
Conducted by the Consumer Reports National Research Center, the Consumer Reports Index, is a monthly telephone and cell phone poll of a nationally representative probability sample of American adults. A total of 1,008 interviews were completed (758 telephone and 250 cell phone) among adults aged 18+. Interviewing took place between April 26 and April 29. The margin of error is +/- 3.2 percentage points at a 95 percent confidence level.