Americans’ financial difficulties increase sharply

Consumer Reports

Americans’ assessment of their current condition weakened this month, with declining sentiment compounded by a sharp rise in financial difficulties, felt particularly by the less affluent. That’s according to the monthly Consumer Reports Index, an overall measure of Americans’ personal financial health.

The Consumer Reports Trouble Tracker measure, which gauges consumers’ difficulty paying bills and other negative financial events, rose dramatically to 46.0 from 34.7. Financial troubles surged among lower-income consumers (households earning $50,000 or less) and those completing high school or less, while the affluent and college educated saw little change.

Lower-income households continue to be disproportionately affected by the economy’s crawling recovery. Twenty-seven percent of them reported they were unable to afford medical bills or medications in the past 30 days—that’s 11 percentage points higher than the national average. Missed bill payments and lost or reduced healthcare coverage also remain among the most prevalently reported financial troubles overall. 

“The economy is staggering along and this recovery remains the weakest since World War II,” says Ed Farrell, director of consumer insight at the Consumer Reports National Research Center. “Uncertainty hangs over the consumer like a veil of smoke fed by the lackluster recovery in jobs.”

Overall, consumer sentiment slid for the third straight month and fell into negative territory for the first time in five months. The Consumer Reports Index’s sentiment measure came in at 48.6 this month, down from 50.8 in August, its lowest level since October 2012. (A score above 50 indicates that more consumers are better off financially, than worse off, compared with one year ago). As with the Trouble Tracker measure, the greatest losses were among lower-income Americans and those that have just a high school education or less.

The Consumer Reports Index’s employment measure moved into positive territory, with more Americans reporting that they started a job than lost one in the past 30 days. That positive figure, however, was driven by a decline in job losses, rather than by job growth and new opportunities.

The level of stress that consumers felt was up from the prior month, 58.0 versus 53.7, respectively. The most stressed Americans are women (59.6), those in households earning under $50,000 (62.0), aged 35 to 64 (60.9), and those in the Northeast (61.5).

The Consumer Reports Index’s retail measure was a mixed bag. Perhaps driven by back-to- school shopping, there was a slight rise in past 30-day activity. There are, however, indications that the consumer may pull back in the coming months, as this momentum did not carry over to planned spending for the next 30 days, which was down versus the prior month as well as from one year ago.

—Chris Fichera

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 1,011 interviews were completed September 5-8, 2013. The margin of error is +/-3.2 percentage points at a 95 percent confidence level.

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