Consumer Distress Begins to Ease as CredAbility Consumer Distress Index Reports Highest Score in 2 ½ YearsWednesday, May 18, 2011

Americans Remain in Financial Distress, But Rise in Employment, Better Household Budget Management Aids Recovery

ATLANTA, GA – The financial picture for US households improved in 2011’s first quarter as employment levels rose and consumers continued to better manage their household budgets.

This is according to CredAbility, one of the leading nonprofit credit counseling and education agencies in the United States, which today released the CredAbility Consumer Distress Index results for the quarter ending March 31, 2011. The index is a quarterly measure that tracks the financial condition of the average U.S. household. It measures five categories: employment, housing, credit, how families manage household budgets and net worth. A score below 70 indicates a state of financial distress.

US households scored a 68.15 on the Index’s 100-point scale, up from 67.2 in the fourth quarter of 2010 and the highest score since the financial crisis intensified in 2008’s third quarter. While the nation remains in financial distress – scoring under 70 for the 10th consecutive quarter – the 68.15 score reflects an increase in full-time and part-time jobs, the smart use of credit and better management of household budgets. On the flip side, the score dropped in the housing category, reflecting minimal improvements in mortgage delinquency rates and rising vacancy rates in apartments and other rental housing.

“The good news is that the full-time labor force grew by more than 540,000 people in the first quarter and consumers with stable incomes have a handle on their credit and household budgets,” said Mark Cole, chief operating officer for CredAbility, and author of the CredAbility Consumer Distress Index. “While the housing category continues to deteriorate, a gain of four points in the index during the past five quarters indicates that the majority of consumers are on the right track.”

Click on the play button above to watch a video of Mark Cole discussing the index’s results.

The index also measures the financial distress level of all 50 states and the District of Columbia. Among individual states, Nevada had the lowest score at 60.8, followed by Georgia, Michigan, Florida and Arizona – all states continuing to suffer from severe unemployment and housing problems. 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.

Beginning with 2011’s first quarter, new data has been added to the index’s housing, credit and household budget categories. This change, combined with the creation of a 30-year history of the index, has resulted in revised scores for previous quarters.

National highlights from the first quarter include:

  • The score for the Credit category was 82, the highest score since 2007’s second quarter. Credit scores were aided by fewer people filing for bankruptcy, with consumer bankruptcy filings dropping six percent nationwide from the same period in 2010.

  • The Employment category jumped four points to 55.7 as unemployment and underemployment fell. The number of people working part-time due to economic reasons fell by 500,000 to 8.4 million. Still, the Employment score in the first quarter was the ninth worst quarter over the past 30 years, according to the index.

  • The Household Budget category rose two points to 77, with data showing that Americans have more money remaining in their checkbooks after paying their bills. However, the ability to continue managing budgets will be under pressure if gasoline prices rise or even stabilize. Approximately 19,000 people who received budget counseling from CredAbility in the first quarter reported that each person spent $593 on gasoline during these three months, up 7.6 percent from the same period in 2010.

  • The Housing category is the only one of five categories that fell in the first quarter, dropping from 62.8 to 61.6. While mortgage delinquency rates fell slightly, vacancy rates for rental housing continued to increase in major states, including Georgia, Florida, Michigan and Texas.

State highlights for the first quarter include:

  • North Dakota and South Dakota continue to have the highest scores among individual states, scoring 82.35 and 81.23 respectively.

  • California, the nation’s most populous state, raised its score for the sixth consecutive quarter to 65.19. The state now ranks 11th among the most distressed states.

  • Six Southeastern states rank among the 10 most distressed states. Each of those states except Alabama experienced a slight increase in its score quarter over quarter.

  • For the first time in the past seven quarters, Nevada scored above 60.

2011 First quarter Index data by state:

Q1 2011

Q4 2010

Q3 2010

Q2 2010

Q1 2010

National

68.15%

67.16%

66.38%

66.58%

65.62%

States

Nevada

60.78%

59.47%

59.06%

59.09%

58.27%

Georgia

62.98%

62.70%

62.70%

62.43%

62.18%

Michigan

63.17%

63.21%

62.70%

62.67%

61.57%

Florida

63.55%

63.30%

62.45%

62.66%

61.58%

Arizona

64.08%

63.71%

63.29%

63.24%

61.69%

Tennessee

64.19%

64.09%

64.74%

64.58%

63.93%

Alabama

64.25%

64.78%

64.14%

64.03%

63.21%

Mississippi

64.35%

63.21%

63.07%

64.01%

62.01%

Rhode Island

64.85%

65.94%

64.90%

65.33%

64.27%

South Carolina

65.15%

64.93%

64.67%

64.38%

63.48%

California

65.19%

64.72%

64.37%

63.93%

63.14%

Indiana

65.45%

64.65%

64.38%

64.43%

63.48%

Ohio

65.73%

65.35%

64.73%

64.77%

64.17%

Oregon

65.90%

65.19%

65.19%

64.99%

64.34%

North Carolina

66.01%

65.70%

65.26%

64.96%

63.97%

Kentucky

66.51%

65.87%

65.50%

66.73%

65.98%

Idaho

66.66%

66.56%

65.79%

65.53%

66.13%

Illinois

67.14%

66.84%

66.31%

66.31%

65.38%

West Virginia

67.74%

68.67%

67.91%

67.03%

67.20%

Arkansas

67.94%

67.17%

66.54%

67.09%

66.86%

Missouri

68.32%

67.35%

67.23%

67.35%

66.81%

Washington

68.59%

68.47%

67.86%

68.37%

66.55%

Maine

69.29%

68.72%

68.82%

69.40%

67.84%

Delaware

69.55%

69.46%

69.74%

69.32%

68.39%

Louisiana

69.72%

70.77%

70.28%

70.70%

70.42%

Utah

69.81%

69.53%

68.75%

68.49%

67.64%

New Jersey

69.81%

70.49%

70.39%

70.39%

69.45%

New Mexico

69.93%

69.18%

69.23%

69.16%

68.48%

Colorado

70.33%

70.23%

69.07%

68.97%

68.37%

Texas

70.39%

69.98%

69.93%

70.28%

69.26%

Pennsylvania

70.50%

70.43%

70.22%

70.40%

69.58%

Maryland

70.74%

70.86%

70.43%

70.78%

69.89%

New York

70.87%

71.08%

71.55%

71.73%

69.83%

Connecticut

71.26%

71.81%

72.32%

72.47%

71.24%

Wisconsin

71.61%

71.31%

70.22%

70.20%

69.38%

Massachusetts

72.04%

71.73%

71.39%

71.36%

70.37%

Oklahoma

72.15%

72.25%

72.01%

71.61%

71.78%

Hawaii

72.45%

72.70%

72.10%

71.71%

69.91%

Montana

72.56%

73.15%

73.01%

72.58%

72.05%

Kansas

72.91%

72.31%

71.86%

72.40%

72.16%

Minnesota

73.55%

72.82%

72.77%

72.19%

71.38%

Virginia

73.97%

72.99%

71.95%

72.60%

71.67%

District of Columbia

74.93%

74.49%

74.82%

75.10%

73.03%

New Hampshire

75.05%

74.48%

73.46%

73.02%

72.03%

Iowa

75.27%

74.85%

73.84%

74.64%

73.35%

Vermont

75.84%

74.91%

75.19%

74.56%

73.33%

Alaska

76.82%

77.04%

75.59%

76.71%

76.24%

Nebraska

78.34%

77.44%

77.01%

78.24%

78.62%

Wyoming

79.15%

77.46%

77.00%

77.65%

76.45%

South Dakota

81.23%

81.30%

79.99%

80.12%

79.96%

North Dakota

82.35%

82.52%

82.63%

82.88%

82.00%

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 630,000 financially distressed individuals each year.