Leading national consumer credit counseling agency launches quarterly CredAbility Consumer Distress Index
ATLANTA, May 26 /PRNewswire-USNewswire/ -- While the U.S. economy is showing signs of recovery, the average U.S. consumer remains in financial distress – despite a significant pullback in household spending. These conclusions are among several key findings of the CredAbility Consumer Distress Index, a new quarterly measure that tracks shifts in the financial condition of the average American household.
The CredAbility Consumer Distress Index is the first index to provide a regular and comprehensive snapshot of the American consumer's total financial picture over time. The proprietary index is published by CredAbility, the leading national nonprofit credit counseling and education agency long known as Consumer Credit Counseling Service of Greater Atlanta. The agency's change to the CredAbility name was announced today in a related news release.
The index uses a proprietary methodology that draws upon multiple data sets. Employment, housing, credit, house- hold budget and net worth information is supplemented with data collected by CredAbility, which serves more
than 750,000 financially distressed individuals each year.
The new index is based on a 100-point scale where a level of 70 or below indicates consumer financial distress. Financial distress is defined as the condition where an individual or household is financially unstable and needs to take immediate action to address their problems.
"Our new index uses proprietary methodology and exclusive data to capture the full scope of shifts in the American consumer's financial position over time," said Mark Cole, CredAbility's chief operating officer. "The index will provide an early confirmation of shifts in consumer behavior."
For the quarter ending March 2010, American households' scored a 64.2 on the 100-point scale, marking the seventh consecutive quarter of financial distress for the average American. However, the index improved slightly compared to the previous quarter score of 63.9—the lowest score since 2006, the first year that the index covers. Other key findings include:
- American households had their highest score—78.7—in March 2007. Since that time, the index has dropped more than 14 points, led by rising mortgage delinquencies and foreclosures, and increased unemployment and under-employment.
- The index dipped below 70—entering a state of financial distress—in September 2008. The index has lingered in the mid-60s for the past six quarters.
- The small improvement in 2010's first quarter is only the third time there has been an improvement compared to the previous quarter since 2006. The increase is due largely to reduced household spending.
"To gauge and test the Index, we ran historical data from the beginning of 2006, when unemployment was low and the economy was growing," Cole continued. "Our data show that the stress on household budgets was significant even then. The consumer had little to fall back on when housing and employment markets fell sharply. On the positive side, we see a stabilizing of the Index score over the last two quarters. That reflects both strengthening household budgets and an improving employment market."
CredAbility has access to significant data from consumers experiencing financial distress through its counseling and education programs. The nonprofit organization provided credit counseling and education to more than 750,000 people across the United States last year.
CredAbility is one of the leading nonprofit credit counseling and education agencies in the United States, serving clients in all 50 states plus Guam, Puerto Rico and the US Virgin Islands, in both English and Spanish. In addition to providing counseling via telephone and internet, CredAbility operates 28 offices across the southeast, including
25 offices where people can receive in-person counseling.
CredAbility is a family of Consumer Credit Counseling Service agencies that include 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 and CCCS of Jackson (Mississippi).
CredAbility 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, contributors and grants from foundations, businesses and government agencies. CredAbility provides 24/7 service by phone at 800.251.2227 and online at www.CredAbility.org.