Report: Consumers more upbeat

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New York City Consumers ended 2009 more optimistic than they have been in the past six months as the January Consumer Reports Index shows Sentiment, Stress and Trouble Tracker levels improving.

The Consumer Reports Sentiment Index has shown its first meaningful uptick since June, climbing to 44.1 from 41.8 in December. The rise in consumer sentiment is tied to a decline in the Consumer Reports Trouble Tracker Index. The Trouble Tracker, which measures the amount of financial difficulties consumers face, now stands at 58.2 -- its lowest level in the past five months. 

Retail shoppers showed up for the 2009 holiday season. Purchases in December were strong building on already sizable gains in November. Consumer purchasing was up about 26% in December from the prior month. The Consumer Reports Past 30-Day Retail Index for January (reflective of December activity) rose to 14.1 from 11.2 the prior month. 

Since October, the Consumer Reports Past 30-Day Retail Index has gained 57 percent. Gains over the prior month were driven by purchasers of personal electronics (34.7%), major home electronics (15.8%) and major home appliances (9.6%).

Not surprisingly, January's retail outlook for planned purchase in the next 30 days has retreated to 8.9, a decline of 27% from December and comparable to the pre-holiday levels of September (8.8). The drop in the Next 30-Day Retail Index was driven by a decline in intent to purchase across most categories, with the exception of major home appliances.

"There is always some level of seasonal pull back to retail spending habits in January owing to the holiday splurge. We will be looking closely at the Retail Index numbers for the first quarter of 2010 as a better indicator of how well the retail sector is fairing," said Ed Farrell, a director of the Consumer Reports National Research Center.

The Consumer Reports Employment Index (49.3) remains statistically unchanged from the prior month and reflective of a job market that is still shedding more jobs than it's creating. The one improvement was a decline in Americans claiming to have lost a job in the past 30 days, down to 6% from 7.4±%  the prior month.

"Our Index shows the economy is gradually improving for consumers with positive movement for many key economic indicators. Employment numbers continue to drag the economy's recovery. It's not just the hardships of the unemployed, it's also the uncertainty it fosters for the future among all Americans," Farrell said.