Yet another survey finds a drop in consumer confidence


Group of People
Consumer Reports joins the crowd finding that the sentiments of American consumers have taken a turn for the worse at the beginning of 2013 – while many have speculated that the protracted fiscal cliff battle left DC politicians holding the smoking gun, CR says it believes stronger employment prospects are needed for significant improvement.

The Consumer Reports Index for February stands at 48.9, down from January’s 51.2 reading. The pessimism is greatest in the $50K-less household income class, with a score of 45.6, while the $50K-$99K group also fell to 50.2.

CR Index’s trouble tracker showed increased problems among some consumers meeting major non-mortgage bill payments and having difficulty meeting medical expenses.
CR also noted a decline in retail spending by $100K+ households.

“Consumers have not rebounded with the arrival of the new year. Middle-income Americans were particularly hard hit this month and appear to be losing ground. It’s hard to imagine a scenario that will create significant improvements in confidence until consumers feel there has been a substantial upturn led by employment,” said Ed Farrell, director of consumer insight at the Consumer Reports National Research Center.

The employment index actually improved month-over-month from 48.8 to 49.4, but that is apparently not a significant enough jump to improve the overall sentiment index.

RBR-TVBR observation: Dramatically increased employment will go a long way toward the creation of a virtuous circle, the benevolent opposite of the vicious circle.

* Newly employed citizens begin to spend at normal levels, and beyond that, begin to act on tabled major expenditure.

* Manufacturers and retailers finally start clearing inventory and have reason to hire employees and create product.

* All of which creates more jobs and perpetuates the circle.

* Meanwhile, demand for unemployment compensation and other government services goes down…

* while tax revenue goes up.

This is the circle we’d like to see getting in gear.