Consumers Still Hurt as Wall Street Bounces Back

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NEW YORK (MainStreet) – Our economy is growing, the stock market continues to recover and experts are quick to tell us that the recession is in America’s rear-view mirror. But American consumers are still feeling the sting.

The Consumer Distress Index, a quarterly metric published by the nonprofit credit counseling group CredAbility, shows virtually no improvement in the fortune of average Americans. The index is calculated by looking at stock prices, employment figures, housing statistics, net worth and household budgets. Only stock prices improved in the fourth quarter, while the other four measures declined or stayed roughly static. Household budgets were a particular cause for concern, as Americans’ ability to live within their means once again declined, dropping from 72.2 to 71.1 on a 100-point scale.

On the whole, the average index for American households stands at a measly 64.32 at year’s end. Scores below 70 indicate that consumers are distressed, and this is only a slight improvement from the 63.96 score registered at the end of 2009, indicating that America has a long way to go. While CredAbility’s methodology is proprietary, the index calls upon statistics including unemployment and credit scores, as well as tracking how well consumers have kept up with paying rent and mortgage costs.

CredAbility Chief Operating Officer Mark Cole suggests that the current economic growth isn’t doing much to help Americans. “While an increase in consumer spending helped the economy in the fourth quarter, the index showed that an increasing number of people failed to prudently manage their household budgets,” Cole said in a press release.

On a state-by-state level, Michigan once again fared the worst with a 58.83 score, yet another indicator of the economic distress that’s prompted a mass exodus from the state’s major cities. Meanwhile, North and South Dakota took the top two spots with scores of 79.35 and 76.94, respectively, and were among seven states above the 70-point threshold. The top four states in the rankings are all located in the Midwest, which comes as no surprise – with the exception of Michigan, the region weathered the recession better than any other part of the country.

The Consumer Distress Index isn’t the only indicator of consumers’ discomfort. The Credit Power Index shows that Americans continue to get squeezed by the interest rate climate at America’s banks, a situation that’s seen little improvement in recent months. Whether at home or at the bank, things are still rough for the American consumer.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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