Consumer Confidence Falls as Middle Class Reports Difficulties

A ""new poll"":http://news.consumerreports.org/money/2013/02/consumer-reports-index.html from the ""Consumer Reports National Research Center"":http://www.consumerreports.org/cro/index.htm (CRNRC) shows consumer confidence is off to a sluggish start in 2013.

[IMAGE]

The Consumer Reports Index, released Tuesday, is the third measure in a week to show consumers suffering in the new year. While last week's ""Survey of Consumers"":https://themreport.com/articles/consumer-sentiment-improves-in-january-2013-02-01 from Thomson Reuters and the University of Michigan showed a slight uptick in sentiment, it revealed a divide between high-income and low-income households after January's payroll tax increase.

According to CRNRC, the Consumer Reports Index sentiment measure declined in February, dropping to 48.9 from 51.2 the prior month. The most pessimistic consumers are those in households earning less than $50,000--their index dropped to 45.6 from an even 50.0 previously.

At the same time, sentiment among middle-income families (earning between $50,000 and $99,000) also dropped, falling from 55.6 to 50.2 this month.

[COLUMN_BREAK]

One of the driving factors in the decline was an increase in financial difficulties among middle-income Americans, CRNRC said. The Consumer Reports Index's Trouble Tracker, which measures the scale and frequency of financial woes that Americans face, climbed to 37.5 for middle-income consumers, while troubles stabilized among the upper- and lower-income households.

The two troubles that rose most over the past month among Americans were missed payments on a major bill (excluding mortgage) and being unable to afford medical bills or medications.

Meanwhile, retail spending among wealthier consumers continues to flounder. The Consumer Reports Index's past 30-day retail measure (reflecting January activity) fell to 10.5 from 11.8, with the largest decline seen among households earning $100,000 or more. Planned spending for the next month (reflecting potential February activity) was also weak, falling to 6.7--its lowest level since April 2009.

There was a silver lining: The Consumer Reports Index employment measure rose slightly to 49.4 from 48.8 last month, turning around two months of declines. However, consumers are reporting more jobs being shed than created, with losses (5.5 percent) outpacing gains (4.4 percent). Job starts in the past month improved slightly, rising 1 percentage point to 4.4 percent, while job losses remained unchanged--and elevated.

""Consumers have not rebounded with the arrival of the new year. Middle-income Americans were particularly hard hit this month and appear to be losing ground. It's hard to imagine a scenario that will create significant improvements in confidence until consumers feel there has been a substantial upturn led by employment,"" said Ed Farrell , director of consumer insight at the Consumer Reports National Research Center.