Average U.S. Households Almost Out of Financial Distress
By: Esther Cho
The Consumer Distress Index, published by CredAbility, found that the average U.S. household is under less financial stress these days, most likely due to factors such as added jobs and the mild winter weather this year.
Overall, U.S. households scored 69.9 out of 100 points, with a score under 70 indicating a state of financial distress. While still 0.1 points shy of rising above the distress category, the score is an improvement from the previous quarter’s 67.6.
Also, 69.9 is the highest score since the 2008 third quarter and the 2.3 point increase from the previous quarter is the highest quarterly jump in seven years.
The index measures financial distress by taking into account five categories: employment, housing, credit, how families manage household budgets, and net worth.
“At long last, the average U.S. household is on the verge of moving out of financial distress,” said Mark Cole, chief operating officer of CredAbility and author of the index.
Cole added that while finances are still tight, so long as gains in employment and housing continue, the financial health of the average U.S. household will further stabilize.
CredAbility started measuring distress among households in the 25 largest metro statistical areas (MSAs) for the first quarter of 2012.
The five MSAs in the most financial distress were Tampa-St. Petersburg (57.9), Detroit (60), Miami-Fort Lauderdale-West Palm Beach (61.5), Atlanta (62.6), and Los Angeles, (62.7). All five areas lag the nation in employment and housing, accounting for their low scores.
The MSAs under the least amount of distress were Washington, D.C (74.1), Boston (73.1), Minneapolis-St. Paul (72.4), Honolulu (71.8), and Dallas-Fort Worth (70.1).
One common characteristic of the six most distressed MSAs was they all had financial distress scores under 50 in the employment category, with Los Angeles at the bottom with a score of 39.5.
Among the 50 states, the most distressed were Nevada (61.66), Georgia (64.04), Michigan (64.75), Mississippi (65.06) and Florida (65.70).
The states in the least amount of distress were North Dakota (84.01), South Dakota (80.21), Wyoming (79.21), Nebraska (79.18), and Vermont (77.75).
Overall, 28 states scored 70 or above during the first quarter.
CredAbility is a nonprofit credit counseling and education agency.
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