CredAbility Consumer Distress Index: Grip of Financial Distress Tightens Again in Third Quarter
Weaker Housing, Household Budgets Reverse Gains in First Half of 2010
ATLANTA, Nov. 17, 2010 /PRNewswire-USNewswire/ -- CredAbility, one of the leading nonprofit credit counseling and education agencies in the United States, today released the CredAbility Consumer Distress Index results for the 2010 third quarter. The Index, a quarterly measure that tracks the financial condition of the average U.S. household, found that the incremental improvements in consumer financial health in the first half of 2010 have been reversed due to weaker household budgets, renewed strains on housing costs and continued high levels of unemployment.
For the quarter ended September 30, 2010, American households scored a 64.4 on the Index's 100-point scale, down from 65.2 in the second quarter of 2010. A score below 70 indicates a state of financial distress. The average U.S. consumer has been in financial distress for nine consecutive quarters, according to the Index.
Index scores fell in 41 states during the recent quarter, underscoring the depth and breadth of consumer financial distress that continues to grip the nation. The average consumer in all but six states is in distress. On a more positive note, Index data shows consumers' net worth remains stable and while the savings rate slipped slightly, consumers continued to pay down debt, indicating that an uptick in household spending in the third quarter was made with current funds instead of borrowed money.
The third quarter 2010 data again reveals stark regional differences. Only six states, mainly in the Great Plains and New England, achieved scores above the distress threshold of 70 points, down from nine states in the second quarter. Two states scored below a 60, a threshold that indicates the average consumer is in financial crisis.
Michigan posted the worst score on the Index with a 58.11, replacing Nevada as the state with the highest level of consumer financial distress. Mississippi ranked second with a 58.76. North Dakota again had the best performance, improving its score to 79.45. To see a detailed explanation of how the Index works and a national map, go to www.CredAbility.org/ConsumerDistressIndex. A link to the Index will also be posted on the CredAbility Twitter account, which can be found at http://twitter.com/CredAbility.
"The third quarter was a mix of bad and good news," said Mark Cole, CredAbility's chief operating officer and executive responsible for the CredAbility Consumer Distress Index. "Consumers continue to clean up their balance sheets, mortgage delinquencies appear to be stabilizing and credit scores remain reasonably good. The uptick in spending, which has been largely focused on necessities, such as back-to-school, is being paid for with current funds, not borrowing. Mortgage refinancing is putting more cash in consumers' pockets. However, the vast majority of Americans remain in financial distress, with a growing number in crisis. Unemployment and housing remain stubbornly weak and until this improves, the American consumer will likely continue to experience financial anguish."
Cole added: "One big change this quarter is the sharp increase in delinquent payments by renters, who comprise just under one-third of the U.S. housing population."
Highlights from the third quarter Index include:
- The five states with the lowest Index scores were Michigan (58.11), Mississippi (58.76) South Carolina (60.10), Alabama (60.23) and Indiana (60.68). Each faces acute challenges in employment and housing markets, which weigh heavily on their overall scores.
- Two states – Michigan and Mississippi – are now under 60, with Michigan replacing Nevada as the most distressed state.
- Among the most distressed states, Indiana moved from No. 12 to No. 5 and Ohio from No. 13 to No. 8.
- Alabama and Louisiana, which were likely affected by the Deepwater Horizon Gulf oil spill, also moved up in the distress index. Alabama moved from No. 8 to No. 4 and Louisiana moved from No. 29 to No. 22 most distressed.
- Florida's position in the rankings improved from No. 3 to No. 7 most distressed and California moved from No. 7 to No. 10, although both states are still among the most financially distressed in the country.
- Forty-four states and the District of Columbia continued to score at levels that indicate distress, up from 41 in the second quarter of 2010.
- The dip in the housing portion of the index was driven by an increase in delinquent payments by renters, with these delinquencies rising by 9 percent over the second quarter of 2010.
- The Index shows that underemployment increased, with approximately 100,000 people moving from full-time to part-time employment.
- Only six states, led by North Dakota (79.45) and South Dakota (76.19), scored above the distress threshold of 70 points. Others were Nebraska (74.87), New Hampshire (72.77), Wyoming (72.54) and Vermont (70.88).
Third quarter Index data by state:
Q3 2010 |
Q2 2010 |
Q1 2010 |
Q4 2009 |
Q3 2009 |
||
National |
64.40% |
65.23% |
65.04% |
63.96% |
65.23% |
|
States |
||||||
Michigan |
58.11% |
61.01% |
60.69% |
60.47% |
61.27% |
|
Mississippi |
58.76% |
60.62% |
60.57% |
60.69% |
61.53% |
|
South Carolina |
60.10% |
61.29% |
60.63% |
60.09% |
60.88% |
|
Alabama |
60.23% |
61.89% |
61.60% |
61.46% |
62.25% |
|
Indiana |
60.68% |
62.61% |
62.27% |
61.74% |
62.32% |
|
Nevada |
60.71% |
59.23% |
59.16% |
59.56% |
60.57% |
|
Florida |
60.81% |
61.01% |
60.70% |
60.48% |
61.37% |
|
Ohio |
60.83% |
63.06% |
62.60% |
62.18% |
63.08% |
|
Georgia |
61.24% |
61.37% |
61.24% |
61.13% |
62.04% |
|
California |
61.31% |
61.71% |
61.36% |
61.29% |
62.33% |
|
Tennessee |
61.54% |
62.26% |
61.72% |
60.97% |
61.70% |
|
North Carolina |
61.66% |
62.28% |
62.11% |
61.53% |
62.46% |
|
Kentucky |
61.72% |
63.38% |
62.83% |
62.03% |
62.81% |
|
Missouri |
62.43% |
64.62% |
64.37% |
63.97% |
64.85% |
|
Rhode Island |
62.57% |
63.70% |
63.33% |
63.20% |
64.15% |
|
Illinois |
63.01% |
64.66% |
64.45% |
64.43% |
65.33% |
|
West Virginia |
63.22% |
64.50% |
64.11% |
63.39% |
64.27% |
|
Arkansas |
63.94% |
65.73% |
65.24% |
64.54% |
65.50% |
|
Arizona |
63.98% |
62.05% |
61.75% |
61.62% |
62.41% |
|
Maine |
64.29% |
66.04% |
65.78% |
65.46% |
66.55% |
|
Washington |
64.88% |
65.60% |
65.59% |
65.71% |
67.06% |
|
Louisiana |
65.07% |
67.64% |
68.13% |
68.59% |
69.43% |
|
Pennsylvania |
65.23% |
66.99% |
66.92% |
66.61% |
67.59% |
|
New Mexico |
65.35% |
65.72% |
65.64% |
65.42% |
66.58% |
|
Hawaii |
65.51% |
68.65% |
67.96% |
67.84% |
69.11% |
|
Delaware |
65.53% |
66.96% |
66.34% |
66.00% |
66.92% |
|
Oregon |
65.88% |
64.66% |
64.29% |
63.72% |
64.58% |
|
Wisconsin |
66.27% |
68.05% |
67.48% |
66.59% |
67.59% |
|
New Jersey |
66.44% |
67.67% |
67.42% |
67.40% |
68.41% |
|
Texas |
66.48% |
65.89% |
65.82% |
65.36% |
66.27% |
|
New York |
66.61% |
67.79% |
67.45% |
67.35% |
68.43% |
|
Oklahoma |
66.88% |
68.63% |
69.02% |
69.10% |
70.05% |
|
Idaho |
67.28% |
65.11% |
64.51% |
64.48% |
65.51% |
|
Alaska |
67.31% |
70.70% |
70.68% |
70.70% |
70.92% |
|
Maryland |
67.58% |
68.94% |
68.94% |
68.89% |
69.94% |
|
Connecticut |
68.20% |
69.23% |
69.04% |
68.96% |
70.10% |
|
Colorado |
68.23% |
68.34% |
68.31% |
68.15% |
68.91% |
|
Kansas |
68.41% |
70.26% |
69.79% |
69.29% |
70.12% |
|
Virginia |
68.50% |
69.30% |
69.16% |
69.21% |
70.14% |
|
District of Columbia |
68.55% |
64.64% |
66.07% |
65.72% |
66.36% |
|
Utah |
68.58% |
67.65% |
67.79% |
68.15% |
69.02% |
|
Massachusetts |
68.96% |
68.37% |
68.18% |
68.08% |
68.98% |
|
Montana |
69.28% |
69.51% |
69.99% |
69.75% |
70.96% |
|
Minnesota |
69.30% |
69.75% |
69.01% |
68.14% |
68.87% |
|
Iowa |
69.91% |
71.40% |
70.97% |
69.98% |
71.08% |
|
Vermont |
70.88% |
72.05% |
71.63% |
71.07% |
72.30% |
|
Wyoming |
72.54% |
72.80% |
72.83% |
72.76% |
73.82% |
|
New Hampshire |
72.77% |
70.64% |
69.26% |
69.07% |
70.16% |
|
Nebraska |
74.87% |
76.09% |
75.47% |
74.20% |
75.31% |
|
South Dakota |
76.19% |
77.43% |
77.21% |
75.62% |
76.91% |
|
North Dakota |
79.45% |
78.95% |
78.89% |
79.25% |
79.83% |
|
About the CredAbility Consumer Distress Index
Published quarterly, the CredAbility Consumer Distress Index uses a proprietary methodology that draws upon multiple data sets. Employment, housing, credit, household budget and net worth information is supplemented with data collected by CredAbility, which serves more than 750,000 financially distressed individuals each year.
About CredAbility
CredAbility is one of the leading nonprofit credit counseling and education agencies in the United States, serving clients in all 50 states plus the District of Columbia, Guam, Puerto Rico and the US Virgin Islands, in both English and Spanish. In addition to providing counseling via telephone and internet, CredAbility operates a network of 31 branch offices across the southeast.
Founded in 1964, CredAbility is a family of Consumer Credit Counseling Service agencies that includes CCCS of Greater Atlanta, CCCS of Central Florida and the Florida Gulf Coast, CCCS of Palm Beach County and the Treasure Coast, CCCS of East Tennessee, CCCS of Jackson (Mississippi) and CCCS of Upstate South Carolina.
The nonprofit agency is accredited by the Council on Accreditation and is a member of the Better Business Bureau and the National Foundation for Credit Counseling (NFCC). Governed by a community-based board of directors, CredAbility is funded by creditors, clients, individual donors and grants from foundations, businesses and government agencies. Service is provided 24/7 by phone at 800.251.2227 and online at www.CredAbility.org.
SOURCE CredAbility
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