Consumers Facing Fewer Financial Difficulties

 Consumers say they are more optimistic and are facing fewer financial difficulties than they did one year ago, according to the Consumer Reports Index for January.

The Consumer Reports Sentiment Index (48.7) is up from the prior month (45.1), from one year ago (44.1), and is at its highest level recorded since October 2008.

"Some of the rise can be attributed to the seasonal January jump, but not all of it. Overall, consumers are feeling better about their financial situation and hopefully this will translate into increased economic engagement in 2011 if this trend continues," said Ed Farrell, a director of the Consumer Reports National Research Center.  

Consumers are facing fewer financial difficulties than they did one year ago. The Consumer Reports Trouble Tracker Index (54.2) is down from last January (58.2). In recent months the Trouble Tracker Index has crept upward, pointing to increasing financial difficulties for consumers. January’s Consumer Reports Trouble Tracker Index stands at 54.2, up from 52.7 the prior month and from its recent low in November (49.3).

The Consumer Reports Stress Index, a measure of the stress consumers feel in their everyday lives versus a year ago, is down significantly in January to 55.4 from 60.8 the prior month and from one year ago (69.0). Beyond the expected seasonal drop, consumer stress is now at its lowest level since this measure was tracked beginning in April 2009. Though stress is still elevated (above 50) there has been a real improvement among consumers.

Consumer retail spending for December showed modest gains versus one year ago. The Consumer Reports Past 30-Day Retail Index (reflecting December activity) came in at 15.4, up slightly from 14.1 last year despite, consumers’ expressing hesitancy to spend in last month’s index. December’s gains were closely associated with the performance of major home electronics. One-fifth of respondents (20.8%) purchased major home electronics in December, up significantly from last year (15.8%).