Consumer Reports Index: Americans see major decline in financial difficulties

The Consumer Reports Index, an overall measure of Americans' personal financial health, revealed a major decline in the financial difficulties faced by consumers and a rise in consumer sentiment ahead of the election and winter holidays.

The Consumer Reports Index comprises five measures: Employment, Retail, Sentiment, Stress, and the Trouble Tracker.

The Trouble Tracker, a gauge of financial difficulties, was at its lowest level since first measured in April 2009, declining from 50.2 last month to 38.7. The largest improvement was among those earning $50,000 or more, although lower-income Americans also saw modest improvement.

The Index's sentiment measure pushed into positive territory (50.7), propelled by gains among Americans earning $100,000 or more, whose sentiment improved 6.7 points to 59.7 percent. Americans earning less than $50,000 saw only a modest rise, although their sentiment remained in negative territory at 48.2 (up from 46.5 last month).

"There is reason for optimism this month, with financial difficulties in decline and sentiment moving upward. These are very heartening signs for retailers, especially as we get into the all-important holiday shopping season," says Ed Farrell, director of consumer insight at the Consumer Reports National Research Center.

The Index's employment measure also reached a high point this month, 51.5, up from 49.7 last month—its highest level since first measured in April 2009. In the past 30 days, more Americans started rather than lost a job. However, job starts remained at relatively low levels. "Continued progress will hinge on increasing job starts over the coming months to sustain gains," says Farrell.

The Index's past 30-day retail measure was down slightly this month (9.6 from 10.6 last month), but was up slightly from a year ago (9.1). However, the next 30-day retail measure, which reflects planned activity for November, showed gains across most categories, and was led by items usually popular as holiday gifts such as personal electronics (21.4 percent, up from 15.9 percent last month) and small appliances (13.8 percent, up from 9.3 percent).

The level of stress that consumers reported was virtually unchanged from last month (57.8 from 58.0).

The Consumer Reports Index, a monthly telephone poll of a nationally representative sample of American adults, is conducted by the Consumer Reports National Research Center. A total of 1,013 interviews were completed between Oct. 25 and 28. The margin of error is +/-3.2 percentage points at a 95 percent confidence level.

Previously:
Last month's Consumer Reports Index: Financial troubles grow for middle-income Americans