Retail suffered as consumers faced a sharp rise in financial woes and a weak employment outlook, according to the Consumer Reports Index, a measure of Americans' personal financial health, which saw significant drops in consumer sentiment that were reinforced by a sharp jump in personal financial troubles over the past 30 days.
The Consumer Reports Index comprises five measures: Employment, Retail, Sentiment, Stress, and the Trouble Tracker.
The drop in sentiment (47.4 from 49.5 the previous month) was driven by a significant souring among affluent Americans in households earning more than $100,000. While still in positive territory (52.2), sentiment levels for this income group haven't been this close to negative territory since October 2010.
Households earning less than $50,000 faced the greatest amount of financial difficulties overall, but financial troubles rose sharply for more affluent households in the past 30 days. The Trouble Tracker measure among affluent Americans jumped a full 8 points from 17.8 to 25.8, while households under $50,000 remained statistically flat (63.6 from 64.7 the previous month).
"These numbers suggest that affluent Americans, who have the liberty to engage in discretionary consumer spending, are facing greater troubles and may be less confident about the health of the economy and their personal finances," says Ed Farrell, director of consumer insight at the Consumer Reports National Research Center.
The Consumer Reports Index's Past 30-Day Retail measure continued last month's decline (9.0 from 9.4) and is at its lowest level since November 2009. Planned spending for the month of September was also down.
The Consumer Reports Index's employment measure remained in negative territory (49.9), statistically unchanged from the prior month. When the number drops below 50 it is indicative of a job market where more Americans are losing rather than starting a job. The past 30-day job gains weakened to 4.8 percent from 4.9 percent, and job losses inched up to 5.1 percent from 5.0 percent a month earlier.
The level of stress that consumers reported feeling was up 58.6 from 56.4 the month before. The most stressed Americans in the past 30 days are those in households earning less than $50,000 (60.3), those in the North East region (61.5), and women (60.5).
"Any gains the economy may have made over the summer in the minds of consumers were given back this month," Farrell said. "Declining sentiment, rising stress, increased financial troubles and a sustained weak employment picture are dragging down their outlook and perceptions."
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 1,011 interviews were completed between Aug. 23 and 26. The margin of error is +/- 3.2 percentage points at a 95 percent confidence level.