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U.S. Households Barely Out of Financial Distress in Q1

U.S. households experienced higher levels of financial distress in the first quarter as they faced budget constraints and a drop in the savings rate, according to the CredAbility Consumer Distress Index.

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With a score below 70 indicating a state of financial distress, households barely stayed out of distress with a score of 70.7 out of 100 in the first quarter of this year, down from 71.77 in the previous quarter, ""CredAbility"":http://www.credability.org/en/homepage.aspx, a nonprofit credit counseling and education agency, reported.

""Despite the growth in jobs and an improved housing market, our index shows that the average U.S. household has seen little improvement in the past year and took a step back in 2013's first quarter,"" said Phil Baldwin, CEO for CredAbility. ""The jump in Social Security taxes in January forced people to save and spend less compared to the previous quarter. With nearly 49 million people on food stamps and almost 12 million still unemployed, there are still a lot of challenges facing many families.""

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The score is based on five categories: employment, housing, credit, how families manage household budgets, and net worth.

Out of the five categories, four rose over the quarter, with the credit category scoring above 90, a first in 24 years. The four remaining categories scored below 70, with housing almost out of distress at 69.6.

North Dakota was found to be the least distressed state, with a score of 84.1. Nevada, which scored a 62.7, ranked as the most distressed state. Out of all 50 states, 21 states scored below 70, up from 13 in the fourth quarter of 2012. In the housing category, 14 states were categorized as distressed.

While Florida remained in its position of distress, it was the only state to improve quarter-over-quarter, rising from a previous score of 68.6 to 68.8.

CredAbility attributed improvements in employment and mortgage delinquency rates in Tampa, Orlando, and Jacksonville to the increase. However, out of the 30 largest metro areas, Orlando's score of 62.4 placed it as the most distressed metro for the third straight quarter.

On the other hand, Minneapolis-St. Paul had the highest score, 78.25, among the largest metros.
Other high scoring metros included Boston (77.39), Washington, D.C. (77.07), Houston (74.99), and Dallas (74.69).

About Author: Esther Cho

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