Upper Income Americans Feeling Financial Stress
NEW YORK (MainStreet) More upper income Americans are experiencing an increasing amount of financial troubles in July than last month while lower and middle-income segments remained the same financially, according to Consumer Reports.
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"It's possible the drop in the S&P 500 and NASDAQ indexes as well as the prospect of rising interest rates may have chilled the outlook for affluent consumers," said Ed Farrell, director of consumer insight at the Consumer Reports National Research Center.
The Consumer Reports Index's Trouble Tracker climbed to 39.2 from 34.0 a month earlier among those households earning $100,000 or more.
Last month, the greatest drop in financial difficulties reported was among those in households earning less than $50,000.
"The data offers a glimpse that consumers may be starting to see and feel the progress of the economic recovery," said Ed Farrell, director of consumer insight at the Consumer Reports National Research Center.
Financial troubles are defined as:
- the inability to pay medical bills or afford medication
- missed mortgage payment
- home foreclosure
- interest-rate increase
- penalty fees
- reduced lines of credit or other changes in credit card terms
- job loss
- reduced health-care coverage
- denial of personal loans
Overall, consumer sentiment remained positive at 52.0.
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"The recovery is sluggishly moving forward," Farrell. "This month's reported sentiment setback and increased financial woes may have been promoted by perception rather than reality."
For the fourth straight month, job gains outpaced job losses. The Consumer Reports Index's employment measure increased slightly to 50.9 from 50.6 a month earlier. This month was among the strongest in job starts at 7.7% up from 5.5% the prior month.
"The steady, gradual improvement in the employment picture, if maintained, is a very positive sign and may work to resolve the continued weakness in retail as consumer confidence builds," said Farrell.
The Consumer Reports Index'' past 30-day retail measure showed spending activity slackened to 8.6 from 9.2 a month earlier and 9.9 a year ago, which was driven primarily by a large seasonal rise in the major lawn and garden equipment category and a small uptick in major appliances. "Consumers are frigid about robust spending," Farrell said. "We are watching closely, waiting to see how long it will take them to thaw out from the mindset created by the conditions of the past five years."
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The level of stress that consumers felt was up slightly to 55.2 from 53.8 last month with women being the most stressed at 55.8, those in households earning under $50,000 coming in second place at 57.1 and the youth aged 18-34 ranking in third place at 56.6.
--Written by Juliette Fairley for MainStreet