The drop in the stock market as well as the prospect of rising interest rates might have chilled the outlook of affluent consumers, according to the monthly Consumer Reports Index.
Overall, consumer sentiment remains in positive territory, unchanged from last month at 52.0 (a score above 50 represents optimism). But among consumers in affluent households, earning $100,000+, sentiment dipped by 2.5 points, while sentiment of those in households earning less than $50,000 was unchanged.
Reported financial difficulties were up this month, driven by increased distress expressed by affluent consumers, while the least affluent saw a slight lessening in difficulties. Overall, the Trouble Tracker Index, which measures consumers' difficulty paying bills, and other negative financial events, stands at 39.2, up from 34.0 last month. That increase was fueled largely by a huge 23.3-point jump among those in households earning $100,000+.
Some affluent households struggled to meet bills, with 6.8 percent unable to afford medical bills or medications, and 5.6 percent missing payments on a major bill other than their mortgage. But those numbers pale in comparison with lower-income households. Of households making less than $50,000 annually, 16.5 percent were unable to afford medical bills or medications and 9.2 percent have missed a payment on a major bill other than their mortgage.
Persistent economic fears have kept consumers uncomfortable about spending. Past 30-day shopping activity slackened this month, and was down from one year ago. Planned spending for the next 30 days, reflecting potential July activity, remains weak and virtually unchanged from last month. The numbers posted this month and last for planned spending are the weakest since first measured in April 2009.
"The recovery is sluggishly moving forward. This month's reported sentiment setback and increased financial woes may have been promoted by perception rather than reality. The steady, gradual improvement in the employment picture, if maintained, is a very positive sign and may work to resolve the continued weakness in retail as consumer confidence builds," says Ed Farrell, director of Consumer Insight at the Consumer Reports National Research Center.
The Consumer Reports Index, a monthly telephone poll of a nationally representative sample of Americans, is conducted by the Consumer Reports National Research Center. It comprises five measures: Employment, Retail, Sentiment, Stress, and the Trouble Tracker. A total of 1,010 interviews were completed from June 27-30. The margin of error is +/-3.2 percentage points at a 95 percent confidence level.
Last index: Consumer sentiment reaches highest level since 2008