The August reading of the Consumer Reports Index fell to 43.3, its lowest level since December 2009. Falling 5.1 points from 48.5 in July, the index registered its sharpest drop in two years.
The figure represents the percentage of people who say they were financially better off than a year ago.
“The debt ceiling debate in Washington focused the consumer’s attention fully on the dire state of the economy, leaving many in a dispirited mood,” said Ed Farrell, director of the Consumer Reports National Research Center.
“Americans are facing real financial difficulties due to weak employment, which is a key impediment to an economic recovery. This is reflected in nearly every measure of the consumer’s experience,” Farrell said.”
Meanwhile, the Consumer Reports Trouble Tracker, which measures the breadth and depth of financial difficulties among American households, jumped 10 points to 60.6. This jump is a direct result of difficulties related to healthcare costs and the inability to pay mortgages and other bills.
As well, the Employment Index fell to its lowest level since March 2010, 49.0, slightly down from 50.8 the previous month, due to the fact that more jobs were lost than created. However, this 1.8-point decline was the largest month-over-month decline since August 2009. During August, 7.2% lost their jobs, while only 5.1% started a new job.
Among households earning less than $50,000, 11.4% lost a job. By comparison, among those earning more than $100,000, a mere 2.1% lost their source of employment.
“The Consumer Reports Index shows no clear signs pointing to an economic recovery anytime soon,” Farrell said. “Too many households are feeling financial pain, and more jobs were lost than created. Unfortunately, the burden of this bad economy has fallen on the households that earn less than $50,000 a year. They’re the ones having trouble finding new jobs, paying bills and affording healthcare.”