Consumers Stressed, Still Buy More

Consumers have a relatively flat financial outlook for the coming months as stress levels rise and financial difficulties increase, according to the Consumer Reports Index for February 2010. However, one bright spot is that retail spending for the previous and upcoming 30 days appear to be on the upswing.

Consumer Sentiment Holds Steady
The Consumer Sentiment Index, measuring consumers’ overall financial sentiment, held steady, standing at 48.7, its highest level in two years. The most optimistic consumers are those age 18-34 at 55.5 (down from 57.2 the prior month), and households with income of $100,000 or more at 61.5 (up from 57.4 a month earlier). The most pessimistic consumers are households with income less than $50,000 at 44.2 (up from 42.7 the prior month), and those age 65 and older at 41.9 (down from 44.1 a month earlier).

The Consumer Reports Sentiment Index captures respondents’ attitudes regarding their financial situation, asking them if they are feeling better or worse off than a year ago. When the index is greater than 50, more consumers are feeling positive about their situation. When it is below 50, more consumers are feeling worse. The Sentiment Index can vary from a high of 100 to a low of 0.

Feb. ‘11 Stress on Par with Last Year
The Consumer Reports Stress Index indicates the level of stress consumers feel they are under is up to 59.3 from the prior month (55.4), but is on par with one year ago (59.9). The Consumer Reports Stress Index captures attitudes regarding the amount of stress consumers feel compared to a year ago. It asks whether they are feeling more stressed or less stressed. When the Stress Index is more than 50, consumers are feeling more stress and when it is below 50 they are feeling less stress compared to a year ago. The index can vary from 100 (total stress) to a low of 0 (no stress).

Financial Troubles on the Rise
Consumers faced more financial troubles this month than the month or year before. The index increased to 58.7 in February, up from January’s 54.2 as well as one year ago (53.4). Negative developments were led by an increase in consumers that were unable to afford medical bills or medications in the past 30 days to 17%, from 15.6% in January and 14.7% one year ago; and an increase in those that have lost or face reduced health-care coverage (9.3%), up from 8.6% last month and 7.5% the prior year.

Overall, the most prevalent consumer troubles include: Unable to afford medical bills or medications (17%); Missed payment on a major bill – not mortgage (9.7%); Lost or reduced health-care coverage (9.3%).