Consumers ended 2009 more optimistic than they had been in the prior six months, according to the Consumer Reports Index, a composite of five indices measuring consumer behavior, attitudes, and consumption patterns.
One component, the Consumer Reports Consumer Sentiment Index, has shown its first meaningful uptick since June, climbing to 44.1 from 41.8 in December. The rise in consumer sentiment is tied to a decline in the Consumer Reports Trouble Tracker Index. The Trouble Tracker, which measures the financial difficulties consumers face, now stands at 58.2— its lowest level in the past five months.That consumers are feeling more upbeat about their finances was also evident in the amount they spent during the 2009 holiday shopping season. Consumer purchasing was up about 26 percent in December from the prior month.
The Consumer Reports Past 30-Day Retail Index for January, reflective of December activity, rose to 14.1 from 11.2 the prior month. Gains over the prior month were driven by purchasers of personal electronics (34.7 percent), major home electronics (15.8 percent) and major home appliances (9.6 percent). The gain in major home appliances is likely attributable to consumers that had deferred purchases over the past few months to take advantage of the deals and discounts that were available during the holidays.
January’s retail outlook for planned purchases in the next 30 days has retreated to 8.9, a decline of 27 percent from December. This drop in the Next 30-Day Retail Index was driven by a decline in consumers’ intent to purchase items across most of the retail categories that we measure, with the exception of major home appliances. “There will always be some level of seasonal pullback to retail spending in January as a reaction to holiday splurges,” said Ed Farrell, a director of the Consumer Reports National Research Center. We will be looking closely at the Retail Index numbers for the first quarter of 2010 as a better indicator of how the retail sector is faring.”Although the overall Consumer Reports Index shows the economy is gradually looking better to consumers, the Consumer Reports Employment Index (49.3) remains statistically unchanged from the prior month. This number reflects a job market that is still shedding more jobs than it is creating. “Employment numbers continue to be a drag the economy’s recovery,” adds Farrell. “It’s not just the hardships of the unemployed, it’s also the uncertainty it fosters for the future among all Americans.”
One improvement in the employment picture, however, was a decline in the number of Americans claiming to have lost a job in the past 30 days, which dropped to 6 from 7.4 percent the prior month.
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 1,275 interviews were completed (1,024 households, 251 cell phone) among adults aged 18+. Interviewing took place between January 7 and January 10, 2010. The margin of error is +/- 2.8 points at a 95% confidence level.—Mandy Walker
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