Financial Stress Worsened Significantly In August, LegalShield Law Index Shows
Consumer confidence remains high, but financial stress is on the rise, according to some new data.
The LegalShield Law Index suggests as it has for the last few months that there will be a downward correction in consumer confidence.
Consumers do have reasons to be confident, but maybe not as confident as they seem to be.
“While confidence remains an important economic indicator, our data suggest that confidence is inflated right now. Decision makers who rely heavily on confidence measures in forecasting consumer spending may be disappointed,” explained James Rosseau, LegalShield’s chief commercial officer.
“Our data, which stem from concrete legal actions undertaken by consumers and small businesses, point to moderate consumer spending heading into the holiday shopping season later this year.”
Affecting the worsening in the Consumer Financial Stress Index is another component of the LegalShield Law Index, the Foreclosure Index, which rose (worsened) 5.1 points to 63.8 in August—though foreclosures remain down nearly 5 percent year-over-year.
Should we be worried? Not yet. LegalShield also sees bright points:
- Housing construction, which has been essentially flat over the last two years, despite substantial demand pressures, should pick up in the months ahead.
- Bankruptcies should remain subdued in the near term. However, bankruptcies may increase in the medium term, particularly if student loan debt, auto loan debt, or credit card debt begin to drag on consumer financial health.
- Existing home sales should slowly improve through the remainder of the year. However, a strong sales resurgence is unlikely to occur in the near term.
The economy should remain on a relatively strong footing overall.
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