{"id":10763,"date":"2015-03-13T18:34:14","date_gmt":"2015-03-13T23:34:14","guid":{"rendered":"http:\/\/news.medill.northwestern.edu\/chicago\/?p=10763"},"modified":"2015-03-13T18:34:14","modified_gmt":"2015-03-13T23:34:14","slug":"consumer-optimism-depends-on-income-bracket-survey","status":"publish","type":"post","link":"https:\/\/news.medill.northwestern.edu\/chicago\/consumer-optimism-depends-on-income-bracket-survey\/","title":{"rendered":"Consumer optimism depends on income bracket: survey"},"content":{"rendered":"

By Meredith Wilson<\/p>\n

Consumers in lower- and middle-income households are less optimistic about their finances and the future of the American economy than higher income households, according to the University of Michigan consumer sentiment index<\/a> released Friday.<\/p>\n

Overall economic confidence dropped by 4.4 percent from last month, driven by a 6.5 percent decline in confidence among the lower and middle classes. Upper income households reported a 3.2 percent rise in optimism.<\/p>\n

<\/p>\n

A few passersby interviewed at random\u00a0in the Loop seemed to feel that the economy \u2013 and their own finances \u2013 were heading in the right direction.<\/p>\n

Robert Zalabak said he just got a new job as a disability case manager with JPMorgan Chase & Co.<\/p>\n

\u201cI\u2019m doing much better. Got a new job, making quite a bit more money,\u201d Zalabak said.<\/p>\n

The bottom two-thirds attributed their pessimism to lower incomes, higher utility costs and the cold weather, according to\u00a0the index.<\/p>\n

The overall decline in confidence could indicate less willingness on the part of consumers to spend. A three-month decline in retail sales<\/a> and unexpectedly slow growth in consumer debt for January seems to support that.<\/p>\n

Alicia Miran said she\u00a0feels good about her financial state, but isn\u2019t spending money.<\/p>\n

\u201cI\u2019m much better. I have cut down on my spending and I paid off all my debt. I am now debt-free,\u201d Miran said.<\/p>\n

Chris Mariano, a bartender, feels the affects of slower spending.<\/p>\n

\u201cIn my industry, in the restaurant industry, what I found that what people were doing was maybe don\u2019t buy that bottle of wine, maybe buy a glass of wine,\u201d Mariano said.<\/p>\n

Despite that, he thinks the economy is on the \u201cup and up\u201d and that he is in a good place, financially.<\/p>\n

\u201cDefinitely way better than a year ago, but I think I\u2019ve just been handling my money way better,\u201d Mariano said.<\/p>\n

Analysts consider the consumer sentiment index a leading indicator, which, combined with other consumer indicators, can paint a\u00a0 picture of how consumers are doing. Consumer spending constitutes two-thirds of the U.S. economy.<\/p>\n

The consumer price index<\/a>, which measures the prices of what people buy, declined by 0.7 percent in January. Personal income<\/a> rose by 0.3 percent in January. The producer price index<\/a>, which measures what sellers make from their goods and services, declined 0.8 percent in January, while gross domestic product<\/a> rose by 2.2 percent in the fourth quarter of 2014.<\/p>\n

America is producing more and paying less for its goods, overall. Unemployment is at 5.5 percent, the lowest it has been in seven years, and people have more money than they did last month. However, two-thirds of consumers are not optimistic about their financial state.<\/p>\n

The Federal Reserve appears to share their lack of optimism.<\/a><\/p>\n

Federal Reserve Chairwoman Janet Yellen has yet to raise interest rates. Raising rates would signal confidence that the economy is strong enough to support them.<\/p>\n

In her recent testimony before the Senate Committee on Banking, Housing and Urban Affairs, Yellen said, “the labor force participation rate is lower than most estimates of its trend, and wage growth remains sluggish, suggesting that some cyclical weakness persists.\u201d<\/p>\n

Despite the concerns over the economy\u2019s recovery, the consumer sentiment index notes: “the overall level of consumer confidence remains favorable enough to support 3.3% growth rate in personal consumption expenditures during 2015.\u201d<\/p>\n

But even the confident Zalabak said that though he\u2019s making more money, he\u2019s not going to be making any big-ticket purchases any time soon.<\/p>\n

\u201cI have a lot of student debt I\u2019m paying off. Once that\u2019s paid off, in\u00a0three or\u00a0four years, then yeah. But getting free of debt, that\u2019s principal on my list,\u201d Zalabak said.<\/p>\n

The next consumer sentiment index comes out March 27.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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