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Retail spending down as back-to-school shopping season kicks off

Consumer Reports News: August 07, 2012 06:08 AM

Retailers may be in for disappointing back-to-school sales this year. The Consumer Reports Index, a gauge of consumer financial health, shows that Americans' retail spending declined slightly in the past month. In addition, purchases registered a sharp decline when compared to a year ago.

"This month's data indicates the fragility of the economy," says Ed Farrell, director of Consumer Insight at the Consumer Reports National Research Center. "Retailers might be expecting a back-to-school sales bump, but after showing some promise of improvement last month, retail activity has retreated, showing declines versus one year ago."

The Consumer Reports Index's past 30-day retail measure wavered slightly this month, dropping to 9.4 from 9.9 last month, yet is well behind what it was at this time last year (12.0). Planned purchasing over the next 30 days (8.8) was virtually unchanged from last month (8.6), but also lags last year (9.3). Categories that saw a drop in the planned purchasing measure include back-to-school products such as personal electronics, which dropped to 16.5 from 17.7 the previous month, and small appliances, which dropped to 12.2 from 12.7 last month.

The Consumer Reports Index's overall sentiment measure dipped into negative territory this month, to 49.5 from 53.1 the prior month. The decline was most pronounced among Americans earning less than $50,000, falling to 44.0 from last month's 50.9.

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Despite the drop in Americans' overall sentiment, the Consumer Reports Index's Trouble Tracker, a gauge of financial difficulties faced by consumers, fell this month to its lowest level since first measured in April 2009 (39.8, from 41.8 last month). Behind this decline, the rift widened between lower- and upper-income Americans. The Trouble Tracker measure increased for those in households earning less than $50,000 to 64.7 from 58.9 a month earlier, while financial difficulties continued to decline for those earning $100,000 or more.

The Consumer Reports Index's employment measure softened this month and also declined into negative territory at 49.9 from 50.9 last month. Though more Americans lost versus started jobs this month, the proportions are in near balance, 5.0 percent versus 4.9 percent, respectively.

The Consumer Reports Index, a monthly telephone poll of a nationally representative sample of American adults, is conducted by the Consumer Reports National Research Center. A total of 1,017 interviews were conducted between July 26 and 29, 2012. The margin of error is +/- 3.2 percentage points at a 95 percent confidence level.

Previously:
Last month's Consumer Reports Index: Americans optimistic about their economic situation

Maggie Shader

   

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