Average U.S. Household Nearly Out of Financial Distress as Employment Rises, Mortgage Delinquencies Fall, CredAbility Consumer Distress Index Finds

Index Posts Highest Quarterly Jump Since 2005

 Index Expanded to Included 25 Major Metro Areas

 

ATLANTA , GA, May 16, 2012 – The addition of 635,000 new jobs, fewer mortgage delinquencies and an ever-improving credit picture helped bolster the financial health of the average U.S. household in 2012’s first quarter. In addition, a mild winter held down heating bills and provided consumers with some additional cushion in their household budgets, and a rising stock market led to small gains in their net worth.

On the local level, consumers in Tampa-St. Petersburg are the most distressed in the nation, followed by those in Detroit, Miami-Fort Lauderdale, Atlanta and Los Angeles. Households in Washington, D.C., are the most financially healthy, followed by those in Boston, Minneapolis-St. Paul, Honolulu and Dallas-Fort Worth.

These are among the key findings of the latest CredAbility Consumer Distress Index, which is published by CredAbility, one of the nation’s leading nonprofit credit counseling and education agencies. The quarterly index tracks the financial condition of the average U.S. household by measuring five categories: employment, housing, credit, how families manage household budgets and net worth.

A score below 70 indicates a state of financial distress. U.S. households scored 69.9 in 2012’s first quarter on the Index’s 100-point scale, a significant rise from 67.6 in the previous quarter. The 69.9 score is the highest recorded since 2008’s third quarter and the increase of 2.3 points from the previous quarter is the highest quarterly jump in the past seven years.

“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. “Consumers weathered rising gasoline prices and are now in the best financial shape since the onset of the recession nearly four years ago. Finances are still tight, but assuming we can hold onto gains in employment and housing, the financial health of the average household will continue to stabilize.”

For the first time since CredAbility began publishing its index, the organization this quarter measured financial distress among households in 25 of the nation’s largest MSAs. The five MSAs in the most financial distress are Tampa-St. Petersburg, which recorded a score of 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 that are the most financially healthy are Washington, D.C., which recorded a score of 74.1; Boston, 73.1; Minneapolis-St. Paul, 72.4; Honolulu, 71.8 and Dallas-Fort Worth, 70.1.

Among the 50 states, Nevada had the lowest score at 61.66, followed by Georgia, Michigan, Mississippi and Florida. To see a detailed explanation of how the Index works, a national map and other data, go to www.CredAbility.org/ConsumerDistressIndex.

MSA highlights for 2012’s first quarter include:

• As expected, high unemployment and difficulty paying for housing are the primary reasons that several metropolitan areas are in financial distress. The six MSAs in most financial distress had scores under 50 in the Employment category and Los Angeles had the lowest score, 39.5. The Los Angeles-Long Beach-Santa Ana MSA had an unemployment rate of 10.9 percent in March, but did add 63,100 jobs during the last year, according to the U.S. Department of Labor.
  
• Mortgage delinquency rates in Tampa-St. Petersburg and Miami-Fort Lauderdale-West Palm Beach are higher than any other MSA. Miami-Fort Lauderdale-West Palm Beach had a mortgage delinquency rate of 18.6 percent and Tampa-St. Petersburg’s was 13.2 percent.
  
• High employment and the ability to manage credit and household budgets helped Washington, D.C. score higher than any of the other 25 MSAs. The Washington-Arlington-Alexandria MSA had an unemployment rate of 5.5 percent in March.
  
• None of the 25 MSAs had a net worth score over 70, indicating that average households are having problems building wealth. Two Texas MSAs had the highest net worth, with Houston scoring a 69 and Dallas-Fort Worth 65.9. Both of these cities had an unemployment rate of 7 percent in March.

2012 first quarter CredAbility Consumer Distress Index data by MSA:

MSA	Q1 2012	Q4 2011	Q3 2011	Q2 2011	Q1 2011
Tampa-St. Petersburg	57.87%	56.93%	56.59%	59.34%	59.82%
Detroit	59.96%	59.59%	58.71%	59.73%	59.57%
Miami-Fort Lauderdale	61.54%	59.08%	57.51%	59.80%	60.64%
Atlanta	62.55%	60.73%	61.09%	62.49%	62.57%
Los Angeles	62.67%	62.00%	61.16%	62.80%	62.83%
San Diego	63.47%	63.21%	62.32%	63.74%	63.85%
Cleveland	64.12%	64.37%	63.69%	65.54%	65.88%
St. Louis	64.24%	63.63%	65.25%	66.73%	65.93%
Chicago	64.59%	65.72%	65.46%	66.61%	67.19%
Philadelphia	65.11%	64.31%	63.71%	67.13%	66.95%
Cincinnati	65.46%	66.31%	66.54%	67.75%	67.54%
Seattle	66.19%	65.78%	64.88%	66.74%	66.77%
Portland	66.25%	66.32%	65.31%	67.07%	66.60%
San Francisco-Oakland	67.09%	65.74%	64.94%	66.49%	66.59%
Milwaukee	67.15%	67.40%	65.90%	68.15%	68.32%
Kansas City	68.14%	66.35%	65.28%	68.01%	67.95%
Pittsburgh	68.49%	69.04%	67.99%	70.42%	69.61%
New York	68.59%	68.49%	68.19%	69.87%	69.69%
Denver	68.94%	68.41%	67.90%	69.77%	69.30%
Houston	69.54%	68.13%	66.93%	69.28%	69.57%
Dallas-Fort Worth	70.09%	68.37%	67.01%	69.09%	69.39%
Honolulu	71.75%	71.31%	70.95%	73.41%	72.98%
Minneapolis-St. Paul	72.43%	72.77%	70.45%	72.03%	71.87%
Boston	73.12%	72.78%	71.75%	74.14%	73.21%
Washington, D.C.	74.08%	73.18%	72.71%	75.11%	75.18%

National highlights for 2012’s first quarter include:

• All 50 states recorded a higher score in 2012’s first quarter than in the previous quarter. In addition, some states with large populations scored above 70 for the first time in several quarters, including Pennsylvania, Texas and New Jersey. California, the most populous state, also improved, rising nearly 1.5 points to 67.88.

• The Index’s Employment category rose more than three points as the nation’s unemployment rate dropped to 8.2%. However, with a score of 59.4, it is still the worst performing of the index’s five categories. Only 11 states have a score above 70 in this category, and the three largest of those 11 states are Minnesota, Virginia and Oklahoma.

• Thirty-four states scored above 70 in the Housing category, including California, indicating that average households are spending a smaller portion of their income on housing and fewer households are delinquent on their mortgage and rent payments. One year ago, only 17 states scored above 70 in this category. 

• The ability to manage credit continues to be the bright spot for the average U.S. household. The score for this category rose nearly 1 point to 87 as credit card delinquency rates and bankruptcy filings fell, while credit scores rose. Average U.S. households are managing their credit better now than at any time in the past 16 years, according to the index.

• Despite the quarterly improvement in household budgets, consumers have lost ground over the past year, dropping more than six points. The performance over the past year indicates that households are saving less and have less money available after paying their monthly bills.

 

2012 first quarter CredAbility Consumer Distress Index data by state: 

	Q1 2012	Q4 2011	Q3 2011	Q2 2011	Q1 2011
National	69.94%	67.60%	66.69%	69.20%	68.15%
States
Nevada	61.66%	59.62%	59.70%	61.64%	60.78%
Georgia	64.04%	62.26%	62.54%	64.97%	62.98%
Michigan	64.75%	62.59%	61.90%	63.75%	63.17%
Mississippi	65.06%	60.98%	61.78%	63.91%	64.35%
Florida	65.70%	63.06%	62.73%	65.22%	63.55%
Arizona	66.05%	63.88%	63.24%	65.97%	64.08%
Indiana	66.22%	64.53%	63.48%	66.95%	65.45%
Tennessee	66.48%	63.63%	63.29%	65.59%	64.19%
South Carolina	66.54%	64.29%	63.34%	66.35%	65.15%
Alabama	66.63%	63.20%	62.62%	63.91%	64.25%
Rhode Island	67.01%	65.50%	65.40%	67.14%	64.85%
North Carolina	67.07%	64.37%	63.54%	67.07%	66.01%
Arkansas	67.88%	65.02%	65.73%	69.09%	67.94%
California	67.88%	66.42%	65.80%	66.64%	65.19%
Kentucky	67.90%	65.15%	63.98%	68.03%	66.51%
Idaho	68.79%	67.18%	66.35%	69.72%	66.66%
Ohio	68.91%	66.68%	65.47%	67.75%	65.73%
Illinois	69.07%	66.41%	66.06%	69.11%	67.14%
Missouri	69.15%	67.22%	66.82%	69.08%	68.32%
Washington	69.35%	67.86%	68.21%	70.41%	68.59%
West Virginia	69.44%	67.29%	66.73%	68.90%	67.74%
Oregon	69.50%	67.59%	66.99%	69.30%	65.90%
Louisiana	69.74%	67.66%	67.62%	69.47%	69.72%
New Jersey	70.20%	68.62%	69.14%	71.36%	69.81%
Texas	70.43%	68.00%	67.39%	70.97%	70.39%
Maine	70.44%	69.14%	68.48%	70.23%	69.29%
Delaware	70.76%	69.22%	68.00%	71.40%	69.55%
New Mexico	70.94%	70.43%	70.28%	72.10%	69.93%
Pennsylvania	71.53%	69.37%	69.53%	72.20%	70.50%
Maryland	71.87%	70.30%	70.28%	73.11%	70.74%
Colorado	72.36%	70.86%	69.65%	72.53%	70.33%
Utah	72.57%	70.25%	68.68%	71.46%	69.81%
New York	72.72%	71.53%	71.46%	72.89%	70.87%
Wisconsin	73.00%	70.87%	69.86%	72.92%	71.61%
Massachusetts	73.54%	71.31%	71.13%	73.59%	72.04%
Hawaii	73.66%	71.68%	72.44%	73.73%	72.45%
District of Columbia	73.68%	73.15%	72.38%	75.43%	74.93%
Oklahoma	73.91%	71.70%	71.61%	75.62%	72.15%
Connecticut	74.33%	71.18%	71.73%	73.60%	71.26%
Kansas	74.89%	72.77%	72.00%	74.94%	72.91%
Montana	75.04%	73.21%	72.53%	75.02%	72.56%
Virginia	76.17%	73.44%	73.48%	75.99%	73.97%
New Hampshire	76.22%	74.32%	73.68%	77.02%	75.05%
Minnesota	77.24%	75.21%	73.00%	75.91%	73.55%
Alaska	77.30%	77.12%	75.87%	78.07%	76.82%
Iowa	77.49%	75.01%	73.85%	77.14%	75.27%
Vermont	77.75%	76.10%	74.20%	78.33%	75.84%
Nebraska	79.18%	77.42%	77.85%	81.06%	78.34%
Wyoming	79.21%	78.31%	77.21%	80.27%	79.15%
South Dakota	80.21%	79.61%	79.61%	81.29%	81.23%
North Dakota	84.01%	82.20%	81.42%	82.00%	82.35%

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 440,000 financially distressed individuals each year.

About CredAbility

CredAbility is one of the leading nonprofit credit counseling and education agencies in the United States, serving clients in all 50 states plus the District of Columbia, Guam, Puerto Rico and the US Virgin Islands, in both English and Spanish. In addition to providing counseling via telephone and internet, CredAbility operates a network of offices across the southeast.

Founded in 1964, CredAbility is a family of Consumer Credit Counseling Service agencies that includes 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, CCCS of Central Mississippi and CCCS of Upstate South Carolina.

The nonprofit agency 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, individual donors and grants from foundations, businesses and government agencies. Service is provided 24/7 by phone at 800.251.2227 and online at www.CredAbility.org.

Media Contacts

Scott Scredon
404.653.8833 office
770.315.0745 cell
Scott.Scredon@CredAbility.org

John McCosh
404.260.3108 office
404.314.7107 cell
John.McCosh@CredAbility.org