Consumer Reports Index takes bad turn


ChartPeople on the lower end of the income spectrum experienced a sharp increase in financial woes, and the overall consumer sentiment index as measured by Consumer Reports slipped into negative territory during the month of August.

According to CR, its Trouble Tracker surged from 34.7 in July to 46.0 in August, primarily driven by problems meeting challenges in households earning $50K or less annually.

Health care is the big problem – 27% of lower-income houses reported the inability to cover medical bills and/or prescription costs, against an overall national average of 16%.

Consumer sentiment, which was just above par in July, slipped beneath par in August, from 50.8 to 48.6. CR said it was the first negative reading in five months and the lowest since October 2012.

“The economy is staggering along. This recovery remains the weakest since World War II. Uncertainty hangs over the lower-income consumers like a veil of smoke fed by the lackluster recovery in jobs,” said Ed Farrell, director of consumer insight at Consumer Reports.

CR noted that consumer spending bucked the overall negative August trend and attributed the increase to back-to-school spending. However, the uptick is not being duplicated going forward in the coming months.

RBR-TVBR observation: We just reported that on a container-by-container basis, imports are up ahead of the holiday shopping season, which while hardly definitive can be seen as an indicator of strong results this year. This report, however, would tend to lead one to the opposite conclusion.

This particular study says that the problems are mostly isolated in the lower economic strata, and while nobody wishes any ill on anybody, perhaps the effects of their troubles will not be as pronounced as they might be in a more generalized downturn. Not that there’s anything good in this, but if sales are strong enough, perhaps it could have the ameliorating effect of getting more cash into the hands of the people most affected by this.

We will be watching for further reports that may shed light on this important topic. Stay tuned.