Consumers Pessimistic About Personal Finances

Washington, DC, Sept. 8, 2009--Despite a rebounding stock market and promising economic indicators, consumers say they are feeling far worse about their finances than they have in the last seven months, according to the Consumer Reports Index for September.

Increased credit card, healthcare, and personal loan issues have contributed to stress levels, with 15.6 percent of Americans experiencing higher credit card interest rates and fees, and 8.5 percent losing health insurance or having their coverage reduced in August.

On a positive note, consumer reactions showed the economy is no longer in freefall. Retail is stabilizing and consumers showed more interest in shopping for big ticket items like homes and cars. Employment improved significantly in August. 

The monthly Index—actually a composite of several indices—tracks trends in several areas of consumer sentiment, through responses from a nationally representative sample of households polled in August.

Consumers are facing more economic hardships. The Consumer Reports Trouble Tracker crept up to its highest level in the past seven months with almost 38 percent of Americans experiencing at least one major negative personal finance event in the past 30 days.

For the sixth straight month, the ability to afford medical bills or medications remains the most prominent trouble Americans are reporting.

Lower-income households, earning less than $50,000 a year, were hurt most. In the past 30 days:

24 percent have been unable to afford medical bills or medications.
7.4 percent lost their job or were laid off.
12.2 percent lost or have reduced healthcare coverage.
14 percent missed a payment on a major bill (not mortgage).

The Consumer Reports Sentiment Index is at the lowest level (38.1) since October ’08. When the index is greater than 50, more consumers are feeling positive about their situation.

The Consumer Reports Retail Index showed that purchasing in the past 30 days was up slightly for personal electronics and small appliances in the month of August compared to July, but flat for all other categories. Planned purchases in September are on par with August.