CR Index: Consumer survey reveals unsteady economic progress

The Employment Index is down in August, 50.2, from 51.1 in July and barely in positive territory. The overall labor force activity has slowed considerably in the past month, with significantly fewer Americans claiming to have started a new job in the past 30 days (5.9% versus 7.8% the prior month). Job losses (5.6%) in the past 30 days were unchanged from the prior month.

While the Trouble Tracker Index declined this month to 56.6 from 57.6 the prior month, overall improvements over the past 30 days were small. This index focuses on both the proportion of consumers that have faced difficulties as well as the number of negative events they have encountered.

Upside in housing, downside in healthcare

The positive developments for Americans included a decline in missed mortgage payments (2.4% from 3.9% in June) and a drop in the proportion of Americans' homes entering foreclosure (0.6% following two months of increases). But the thorn in Americans' side continues to be healthcare coverage. Nearly one in ten (9.7%) reported reduced coverage, the highest level recorded since April 2009.

The Sentiment Index is unchanged for August at 44.7. It captures respondents' attitudes regarding their financial situation, asking them 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. Unfortunately, it has changed little since October 2009, when it stood at 42.1, and has not entered positive territory since it was first measured in October 2008. Despite recent improvement in retail activity and economic news pointing to signs of recovery, consumers remain reserved in their outlook.

Stress level about the same

According to the Stress Index, consumers are feeling about the same amount of anxiety (59.4) than they were a month ago (61.0), but less than they were one year ago (63.5).

"This is a recovery at risk," said Ed Farrell, a director of the Consumer Reports National Research Center. "There are several factors fueling this uncertainty including job creation, which remains anemic, along with consumers' sentiment that has held steady in negative territory for two years, reflecting that Americans have not seen any real improvement in their financial situations since we entered this recession."

Purchase plans rosier

One bright spot: The Consumer Reports Retail Index, which looks at consumer purchases in the past 30 days, as well as the outlook for planned purchases in the next 30 days across several categories. The Past 30-Day Retail Index for August, which reflects July activity, is at 11.4—its highest level since the holiday season. The largest gains were posted by personal electronics (24.9% up from 22.5%); small appliances (20.3% up from 17.4%); and major home electronics (12.7% up from 10.8%).

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 1,259 interviews were completed (1,009 telephone & 250 cell phones) among adults aged 18+. Interviewing took place between July 29 –August 1, 2010. The margin of error is +/- 2.8 points at a 95% confidence level.—Mandy Walker