The Consumer Report Index Releases Telling Information

The economic downturn of 2008/2009 is now over and many groups are doing their assessments of where the economy is at now. A new report done by Consumer Reports shows that consumers are not expanding their spending, but rather returning to the pre-Christmas frugality. During the Christmas season, retailers were hoping that consumers spent extra cash. Fortunately they did. Retailers were hoping that the spending spree would last, but now they know better.

Tracking the economy

December’s activity was high. The Consumer Report’s shopping index for December was 14.1. By January that index fell to 10.9 and in February, it has already fallen to 6.9. That makes it well below the pre-holiday index and is proving that consumers are being frugal and conservative with their payday cash. In fact, the 6.9 index is the lowest level the index has fallen since it’s been tracked.

Consumers in financial difficulties

Part of the decline in the shopping index was a loss of major appliance buys. During the holiday season consumers were buying stoves, washers, dryers, refrigerators and personal electronics in large numbers. Now, they are drastically slowing down their purchases. Contrary to the move, though, is the fact that consumers are also suffering less financial difficulties. According to Consumer Reports survey, Americans are doing better financially. The biggest difficulty Americans had was affording medical bills and/or medications. That number is now down by 2% since the end of last year. Looking at medical bill affordability is a major factor in tempering the economic state and how consumers are managing financially.

The Consumer Report’s overall index

Consumer Reports calculates an overall index that is comprised of five individual indices: the Sentiment Index, the Trouble Tracker Index, Stress Index, Retail Index and the Employment Index. Here are the numbers reported:

  • The Sentiment Index. The Sentiment Index gauges the optimism and pessimism of consumers. Those in the 18 to 34 range were the most optimistic about the future, as were those with incomes of over $100,000. The most pessimistic Americans are those with less than $50,000 in household income and those over 65 years of age. This index was steady throughout February as compared with January.
  • The Trouble Tracker Index. This is an index that tracks the economic climate and how many difficulties are predicted in the near future. This index has shown a great improvement over the past month. It was at its height during the height of the recession.
  • The Stress Index. The stress index gauges just that: the amount of stress consumers feel due to the economy. That index has fallen since December but stayed at the same level as January. It’s an indicator that though people are feeling better about the economy, they aren’t yet embracing true change. Consumers continue to be reserved in their assessment of the market.
  • The Retail Index. The retail index declined after a high in December. It is now leveling off and remaining conservative. It’s returned to pre-holiday season numbers.
  • The Employment Index. Finally, the employment index is still low. This reflects the number of job losses in the market. It is indicative of an economy that eliminated a large number of jobs and has yet to replace them.

The future of the indices

The new Consumer Report’s indices are accurately gauging the state of the economy. Over time, it’s hoped that each one will improve considerably, but until they do, consumers are left to continue managing through the difficult times. Though it is hard, many are rallying, getting serious about their finances and hoping for the best.

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