Alternative CredAbility Consumer Distress Index

St. Louis Fed: CredAbility Consumer Distress Index

The Index score is tied to one of 5 general rating categories, which reflect the strength and stability of the consumer’s position.

Less than 60 Emergency / Crisis
60 – 69 Distressed / Unstable
70 – 79 Weakening / At-Risk
80 – 89 Good / Stable
90 and Above Excellent / Secure

What Does the Index Measure?

We measure the 5 categories of personal finance that reflect or lead to a secure, stable financial life—Employment, Housing, Credit, Household Budget and Net Worth. All are equally important, so have given each category equal weighting.

Click to enlarge.

That index is showing a relatively strong recovery from "distressed/unstable" to "weakening/at-risk". Yay.

As seen in the following chart, I have chosen to use the median instead of the average. Why? A few good apples can't purify the barrel! Put another way, I think the median can generally do a better job of describing the core trend (and where we are within it).


Click to enlarge.

As of the first quarter of 2013, the median index value was 65.5 (solidly "distressed/unstable"). The index most responsible for the recent decline in this chart was the household budget distress index. It's doing some serious damage to this alternative consumer distress index (just like it was heading into the last two recessions).

The long-term trend (seen in the red trend line) is definitely not our friend. In my opinion, we're in rearranging deck chairs mode. We can temporarily boost some of the indices apparently (but only at the expense of the others). And why might that be?


Click to enlarge.

The looting will continue until morale improves.

July 30, 2013
PandoDaily: America can kiss its ass and consumer economy goodbye: The view from dystopia

Entrepreneurs and digital marketers spend their days dreaming about the next hot thing that will drive the American consuming class into lucrative paroxysms of purchasing. The looming problem with this dream is that the consuming class appears to be on the endangered list.

A new non-partisan government study confirms that income inequality in America has been rising for four decades and projects it will continue getting worse for at least 22 more years. If this keeps up much longer, eventually the super rich will have all the money and the rest of us will be locked into poverty. Forever.

Nail... on... the... head.

Just opinions! Once again, this is not investment advice.

Source Data:
St. Louis Fed: CredAbility Consumer Distress Indices
St. Louis Fed: Gini Ratio of Families