April 9, 2023

CredAbility Consumer Distress Index

Q4 2010

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The U.S. consumer remains in financial distress

The CredAbility Consumer Distress Index measures the financial health of the average U.S. households on a 100-point scale. A score of 70 or below indicates distress. The average U.S. consumer has been in financial distress since the middle of 2008.

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Increased economic activity has not yet helped many Americans

The economy has been growing for two years, but the growth in gross domestic product is failing to ease consumer financial distress. In this chart, the green line shows the percent change from the preceding period in gross domestic product. The blue line represents quarterly change in the Consumer Distress Index over the same five-year period.

Sources: U.S. Bureau of Economic Analysis and CredAbility

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Employment at crisis levels across much of the U.S.

Two factors—housing and employment—have weighed most heavily on consumer financial health. “A tale of two different American families is developing in America,” said CredAbility’s Mark Cole. “The family with one or two stable jobs is seeing their investments grow again and is beginning to spend more of their household income. But families that have lost a job or seen other income sources reduced, and who don’t have enough income to invest, have experienced increased financial distress.”

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Consumer spending is up, but health of household budgets is down

One of the most disappointing findings in the fourth quarter CredAbility Consumer Distress Index is the continued weakness in the health of household budgets, which declined each quarter in 2010 and are at the lowest level since the first quarter of 2009. While an increase in consumer spending helped the economy in the fourth quarter, the index shows that an increasing number of people failed to prudently manage their household budgets. This lack of savings could cause financial problems if they need to rely on their savings in the future.

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10 states with the greatest financial distress

For the second straight quarter, Michigan has suffered the highest level of financial distress. The nation’s 10 most financially distressed states, which include California, Florida, Georgia and Indiana, account for nearly one-third of the nation’s Gross Domestic Product (GDP).

  Q4 2010 Q3 2010 Q2 2010 Q1 2010 Q4 2009

National 64.32% 64.40% 65.23% 65.04% 63.96%

Michigan 58.83% 58.11% 61.01% 60.69% 60.47%

Mississippi 59.24% 58.76% 60.62% 60.57% 60.69%

Nevada 59.27% 60.71% 59.23% 59.16% 59.56%

Alabama 60.03% 60.23% 61.89% 61.60% 61.46%

Florida 60.21% 60.81% 61.01% 60.70% 60.48%

South Carolina 60.56% 60.10% 61.29% 60.63% 60.09%

Indiana 61.16% 60.68% 62.61% 62.27% 61.74%

Georgia 61.26% 61.24% 61.37% 61.24% 61.13%

North Carolina 61.38% 61.66% 62.28% 62.11% 61.53%

California 61.39% 61.31% 61.71% 61.36% 61.29%

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10 states with the least financial distress

While the average American in 43 states is in distress or crisis, seven—led by North Dakota and South Dakota—scored above the distress threshold of 70 points on the CredAbility index. Seven more states and the District of Columbia are within two points of moving out of financial distress.

  Q4 2010 Q3 2010 Q2 2010 Q1 2010 Q4 2009

National 64.32% 64.40% 65.23% 65.04% 63.96%

Montana 69.20% 69.28% 69.51% 69.99% 69.75%

District of Columbia 69.31% 68.55% 64.64% 66.07% 65.72%

Minnesota 69.38% 69.30% 69.75% 69.01% 68.14%

Massachusetts 69.58% 68.96% 68.37% 68.18% 68.08%

Iowa 70.05% 69.91% 71.40% 70.97% 69.98%

Vermont 71.32% 70.88% 72.05% 71.63% 71.07%

New Hampshire 73.30% 72.77% 70.64% 69.26% 69.07%

Wyoming 74.09% 72.54% 72.80% 72.83% 72.76%

Nebraska 74.84% 74.87% 76.09% 75.47% 74.20%

South Dakota 76.94% 76.19% 77.43% 77.21% 75.62%

North Dakota 79.35% 79.45% 78.95% 78.89% 79.25%

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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 638,000 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 28 branch 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 Jackson (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.