The U.S. economy continued to crawl forward at a sluggardly pace in July. The month saw a sharp drop in hiring, slower retail spending, and a slightly more pessimistic outlook (particularly among middle-income households), according to the Consumer Reports Index, an overall measure of Americans’ personal financial health.
Retail activity in the past 30 days declined to 8.1 from 8.6 a month earlier, and is now at its lowest level since first measured in April 2009.
“The recovery is progressing, but slowly. It is hard to maintain optimism month over month, so there are going to be steps back along the way,” said Ed Farrell, director of consumer insight at the Consumer Reports National Research Center.
Overall, consumer sentiment remains barely in positive territory, down to 50.8 from last month’s 52.0. (A score above 50 indicates that more consumers are better off financially than worse off, compared to one year ago.) But among consumers in middle-income households (with annual income between $50,000 and $100,000), sentiment fell sharply, dipping by 2.7 points.
The Consumer Reports Index’s employment measure showed an overall drop. The proportion of Americans claiming to have started a new job in the past 30 days fell sharply from last month (to 5.8 percent from 7.7 percent). Middle-income Americans were particularly hard hit.
One bright spot was the decline in reported financial difficulties. The trouble tracker measure, which gauges consumers’ difficulty paying bills and other negative financial events, dropped to 34.7 from 39.2 last month. The most prevalent consumer troubles included being unable to afford medical bills or medications (11.4 percent); missing a payment on a nonmortgage major bill (6.0 percent), and lost or reduced health care coverage (4.7 percent).
The level of stress that consumers felt was down slightly from the prior month, to 53.7 from 55.7. (A score above 50 indicates that more consumers are feeling stress rather than fewer feeling stress, compared to one year ago.) The most stressed Americans were women, people in households earning under $50,000, those aged 65+, and people in the South.
“The numbers we have seen suggest it is not mounting economic trouble that is holding consumers back, but instead insufficient job growth and falling consumer confidence. A scenario of robust growth is difficult to imagine without improvement in these areas,” Farrell said.
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 1,005 interviews were completed between July 25 and July 28. The margin of error is +/-3.2 percentage points at a 95 percent confidence level.
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