Consumer Reports Index: Americans curb spending after holiday binge

Yonkers, N.Y. The February Consumer Reports Index, released Tuesday, reported that while the recent holiday season presented some hope for recovery in the retail sector, it appears consumers are back in the doldrums and unwilling to spend their way out of the recession.

The Past 30-Day Retail Index for February, reflective of January activity, is at pre-holiday levels, according to the report, declining to 10.9 from January's 14.1, which reflected December holiday shopping, a decline of 23%.

The Next 30-Day Retail Index, reflecting planned purchasing for February, plummeted to 6.9 from 8.9 the prior month, making it well below pre-holiday levels and the lowest level tracked since August 2009 (7.5).

The losses in the Past 30-Day Retail Index reflected purchases made in January versus the prior month, and were driven by personal electronics (23.6%, down 11.1 percentage points), major home electronics (13.9%, down 1.9 percentage points), and major home appliances (6.3%, down 3.3 percentage points).

The drop in the Next 30-Day Retail Index for February was driven by a decline in consumer intent to purchase major appliances (5.7%, down 2.1 percentage points) and personal electronics (13.2%, down 3.9 percentage points).

Retail purchases may be dropping, but the report revealed that Americans may be faced with less financial difficulties. The Consumer Reports Trouble Tracker showed real improvements, declining to 53.4 in February from 58.2 in January and its high of 68.7 in September.

The Consumer Reports Employment Index remained unchanged at 49.0 versus 49.3 in January, but there is a significant trend emerging. Over the past several months, the proportion of Americans reporting a job loss in the past 30-days steadily declined to 5.7% in February versus 7.8% in October; however Americans reporting starting a new job in the past 30 days has also declined to 3.8% in February from a recent high of 6.2% in September. Slow job creation remains a significant drag on the economy.

"The holiday season showed glimmers of hope for the economy, but it is clear through the retail index that consumers are now cutting back on spending," said Ed Farrell, director at the Consumer Reports National Research Center. "While the economy is improving gradually for consumers as witnessed by improvements in the Trouble Tracker, which points to a decline in financial difficulties, the level of job creation needed to fuel a consumer recovery has not developed, though the tide of job losses has been stemmed."