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U.S. HOUSEHOLDS STAY OUT OF FINANCIAL
DISTRESS FOR THIRD STRAIGHT QUARTER
For the first time since 2008, U.S. households have not been in financial distress for three
consecutive quarters, according to the Consumer
Distress Index from CredAbility, a nonprofit
credit counseling agency.
In Q 4 2012, households scored 71.8 out of 100,
up from 70.5 in Q 3 2012 and 67.6 in Q 4 2011. A
score below 70 indicates a state of financial distress.
"The average household appears to have
turned the corner, managing credit wisely over
the holidays and saving money over concerns that
the federal government could have fallen over the
'fiscal cliff,'" explained Mark Cole, CredAbility's
EVP.
Despite the recent improvements, Cole warned
of threats that still remain. "However, these recent
gains may be fragile," he said. "We need to stay
vigilant as mortgage delinquencies remain stubbornly high and increases in gasoline prices and
Social Security taxes in January take more money
from consumers' paychecks."
The quarterly index measures distress by tracking five categories: employment, housing, credit,
how families manage household budgets, and net
worth. According to the counseling agency's index, all categories increased over the 2012 calendar
36
year and employment rose to the highest level in
four years.
In addition to a national score, the index ranks
all 50 states and 77 of the largest metropolitan
statistical areas (MSAs).
In Q 4, 13 states were categorized as being in
a state of distress with scores below 70. Hard-hit
Nevada had the lowest score, 63.4. Mississippi had
the second-lowest score at 65.46. Rounding out the
country's five lowest-scoring states were Georgia
(66.46), Alabama (67.10), and Michigan (68).
The four states furthest away from a state
of distress were located in the Great Plains:
North Dakota (86.48), South Dakota (84.32),
Wyoming (81.54), and Nebraska (79.86). Iowa
had the country's fifth-highest score, 79.71. North
Dakota, South Dakota, and Wyoming are also
among the nation's top five for their low mortgage
delinquency rates, according to data from Lender
Processing Services.
Among the MSAs, CredAbility deemed
Minneapolis-St. Paul as the most financially fit
with a score of 80.12. According to CredAbility's
index, Orlando, Florida, is the most distressed
MSA displaying a score of 59.7.
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