Financial Troubles Increase for Households in June

Financial Troubles Increase for Households in June


Americans polled by Consumer Reports indicated they are facing significantly more financial troubles than in June, according to the group’s latest index.

The Consumer Reports Index measures Americans’ financial health based on five key measures: the Sentiment Index, the Trouble Tracker Index, the Stress Index, the Retail Index, and the Employment Index.

According to Consumer Reports, the Trouble Tracker Index climbed more than five points to 39.2 in July, “an increase that was entirely fueled by an epic 23.3-point jump among those households earning $100,000 or more,” the organization said. The tracker measures the proportion of consumers that have faced difficulties and the number of negative events they have encountered. Negative events include a missed mortgage payment and home foreclosure.

The spike in difficulties reported both upper-income households was reflected in the report’s consumer sentiment measures. While the lower- and middle-income segments experienced virtually no change in their sentiment, consumers in upper-income households

reported a dip of 2.5 points. Overall, consumer sentiment remained in positive territory and unchanged at a reading of 52.0.

Meanwhile, the 30-day retail measure showed spending activity slipped to 8.6 from 9.2 a month earlier, showing customers aren’t comfortable spending yet. Planned spending for the next 30 days—reflecting July activity—was weak at 6.2 (only a slight improvement from June’s value of 6.0). June and July’s planned spending numbers were the weakest since Consumer Reports first started measuring that data in April 2009.

News was better on the jobs front, where gains outpaced losses for the fourth straight month. The Employment Index was up slightly to 50.9, and job starts totaled 7.7 percent, up from 5.5 percent last month. However, that gain was partially offset by a similar rise in job losses, which increased to 6.0 percent from 4.2 percent the prior month.

Finally, the level of stress reported by consumers was fairly flat at 55.7. The most stressed Americans were women (57.7), those in households earning less than $50,000 (58.5), those age 35-64 (57.2), and those living in the South (58.0).

“The recovery is sluggishly moving forward,” said Ed Farrell, director of consumer insight at the Consumer Reports National Research Center. “This month’s reported sentiment setback and increased financial woes may have been promoted by perception rather than reality. The steady, gradual improvement in the employment picture, if maintained, is a very positive sign and may work to resolve the continued weakness in retail as consumer confidence builds.”


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