Consumers face increasingly less financial distress

Consumer confidence fairy

The Consumer Confidence Fairy is flying a little higher is some cities than in others. Image: petesimon/Flickr/CC BY

An analysis of the first three months of this year showed a lowering of consumer distress as new hires increased across the nation and the housing market picked up.

Consumer Distress Index

The non-profit credit counseling site CredAbility initiated the annual “consumer distress index” report. The index measures the financial health of everyday consumers in several key areas, including employment, housing, credit, household budgets and net worth. A score of 70 or higher on the index indicates financial stability.

Reaching the numbers

The study looked at the available data from 65 economic surveys conducted by the federal government and private groups. It also factored in its own consumer research.

As a nation, American consumers rated a 6.9 on the scale in the first quarter, the highest number since the third quarter of 2008. It was up from 67.6 in the final quarter of 2011.

Mark Cole — executive vice president and chief operations officer for CredAbility and author of the study — said that, finally, U.S. consumers are seeing their finances improve:

“We’re getting close to being healthy. We’ve been in distress for so long, and we’re right there on the brink of it … We’re beginning to see households be a little more optimistic.”

State findings

However, those finding are not consistent across the United States. Some area are recovering more rapidly than others.

A moderate recovery is reinforced in the state-by-state breakdown. All state numbers were up or stable across the nation, and no state was classed as at the lowest “Emergency Crisis” level. However, none achieved the highest “Excellent, Secure” status, either. Two states did, however, rate the “good, stable” second level rating.

City dwellers

CredAbiltiy also broke down its findings by cities. Washington, D.C. ranked highest, with a score of 74.1. The remaining nine cities with the highest scores in the index were Boston, Minneapolis, Honolulu, Dallas, Houston, Denver, New York, Pittsburgh and Kansas City.

The city with the lowest rating on the index was Tampa, Fla., with a score of 57.9. The next lowest ranking cities, in ascending order, were Detroit, Miami, Atlanta, Los Angeles, San Diego, Cleveland, St. Louis, Chicago and Philadelphia.

This map displays the consumer distress index rating for the 25 cities studied in the report.

Unemployment still too high

Renewed stability will only come as a nation, said Cole, when unemployment reduces yet further. He said:

“Jobs are really the engine of all of this. That’s where we’ll find stability in the long term.”


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