A monthly report that covers bankruptcy, foreclosure, consumer confidence, and other data was released Thursday revealing that foreclosures are increasing—and bankruptcies could be close behind.
LegalShield, a provider of legal safeguards and identity theft solutions, released its LegalShield Law Index that uses five indices: the LegalShield Consumer Financial Stress Index, Bankruptcy Index, Housing Activity Index, Foreclosure Index, and Real Estate Index. The indices rely on LegalShield’s unique and proprietary database of member demand for and usage of legal services as well as a close tracking of the Consumer Confidence Index by The Conference Board, Housing Starts report by the Census Bureau, and Foreclosure Starts by the MBA.
In its Foreclosure Index, foreclosures worsened, which is reflected in a 5.1 point rise to 63.8 in August, even though foreclosures remain down nearly 5 percent year-over-year. LegalShield said if debts such as student loan, credit card, and auto increase, bankruptcies could also be on the rise, mainly due to consumer financial health being weighed down.
"While confidence remains an important economic indicator, our data suggest that confidence is inflated right now,” said James Rosseau, LegalShield's Chief Commercial Officer. “Decision makers who rely heavily on confidence measures in forecasting consumer spending may be disappointed."
Rosseau said the inflated confidence is due to what they believe is stubborn optimism. Though consumers have reason to be assured about the economy, and LegalShield hopes for continued economic strength, their data has worsened in recent months.
“In light of these developments, we want to make decision makers aware that consumer spending will likely continue to fall short of the levels implied by consumer confidence,” Rosseau said. “In short, the consumer picture is pretty good, but not gangbusters."
LegalShield publishes the Law Index on the sixth business day each month. To read the full report, click here.