broke no moneyThe average American household is slipping deeper into financial distress, according to the latest Consumer Distress Index report by CredAbility, a credit counseling agency.

According to the report, the average U.S. consumer has been in financial distress for nine consecutive quarters. For the quarter ended September 30, 2010, American households scored a 64.4 on the distress index, down from 65.2 in the second quarter of 2010. A score below 70 indicates financial distress.

The average consumer in all but six states scored above 70 on the index's 100-point scale, and 41 states saw their index scores drop in the third quarter, indicating that the level of financial distress in those states is increasing. The index is calculated using statistics covering employment, housing, credit, household budgets and net worth.

"To see the index drop in 41 of 50 states tells you just how fragile this recovery is, especially since 70% of our economy is dependent upon consumer spending and consumer health," said Mark Cole, CredAbility's chief operating officer who manages the index.

Some Improvements, but Unemployment Still Holds Sway

Cole said the drop in the index scores is particularly disappointing because there had been signs that things were getting better for consumers in the first half of the year. He said there is evidence that consumers are continuing to clean up their balance sheets, mortgage delinquencies are stabilizing and credit scores are improving. Consumers have also begun spending again using cash, not credit.

"Unfortunately, the vast majority of Americans remain in financial distress," Cole said. "Unemployment and housing remain stubbornly weak and until this improves, the American consumer will likely continue to experience financial anguish."

Michigan (58.11) was the state with the lowest score and thus the highest financial distress, followed by Mississippi (58.76) South Carolina (60.10), Alabama (60.23) and Indiana (60.68). High unemployment and housing-related problems like delinquent mortgage and rental payments hurt their overall scores. The six states with scores above the financial distress level were North Dakota (79.45), South Dakota (76.19), Nebraska (74.87), New Hampshire (72.77), Wyoming (72.54) and Vermont (70.88).

Cole said that although it appears consumers slipped a bit in the third quarter, there is hope that the positive movement from the first half of the year will return soon.

"Consumers are acting in more responsible ways and that's going to bode well for us over the long term," he said. "If we can find solutions that can get people back to work and sort our way out of this mortgage mess, then the behaviors that consumers are exhibiting now will bode well for a long-term sustainable recovery."

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phillipbrehm

Is the sentence supposed to read "The average consumer in all but six states scored above 70 on the index's 100-point scale..." Or should it read BELOW 70 on the scale. What's there seems wrong since later in the article the six states that scored above 70 are listed. Does anybody check copy anymore before it's published?

November 18 2010 at 6:43 PM Report abuse rate up rate down Reply
ejordon326

Our jobs and companies have moved overseas to a variety of countries. We cannot recover until some of these jobs are brought back to the US. What are countries going to trade with us? They already have all of our manufacturing. We have nothing to export, nothing being built here in US. Hence, no jobs. Maybe out government should look at why they are leaving , where they are going and how do we get them back. Don't blame it all on workers salaries. They are replaced by moving/set up expenses and the cost to bring products BACK to the US to sell to us..Something is wrong with this picture.

November 18 2010 at 4:56 PM Report abuse rate up rate down Reply
1 reply to ejordon326's comment
obama fools

ITS TAXES NOT PAY .STOP DRINKING obamas KOOL-AID

February 05 2011 at 1:31 PM Report abuse rate up rate down Reply
velociwrangler

DrBuckles. What? You're shocked that the Republicans ( who have not even taken office yet ) have not cut the deficit in half in one week? OMG, but you say Obama needs more than two years to dance his tune. ROFL. Well, now that Mumbai and Seoul have both shown him the door and our national prestige is at all time low, maybe he will get to work on something over here. He was just waiting until his approval/disapproval rating was the same as Sarah Palin's to really get started. ROFLMAO at Socialists everywhere.

November 18 2010 at 3:45 PM Report abuse -1 rate up rate down Reply
velociwrangler

It is a long running and well tested fact that your best chance of finding a job is in the week AFTER your benefits run out. Human nature, not rocket science.

November 18 2010 at 3:36 PM Report abuse -1 rate up rate down Reply
velociwrangler

DrBuckles......Oh no, say it ain't so! Surely, with this being the season of wailing and weeping, the Americans on Permanent Vacation Act will be extended once again. What a bunch of dopes we are.

November 18 2010 at 3:33 PM Report abuse -3 rate up rate down Reply
mrtaxattorney

ALL of our financial distress began AFTER the Democrats took over Congress

November 18 2010 at 3:32 PM Report abuse -3 rate up rate down Reply
1 reply to mrtaxattorney's comment
velociwrangler

LOL, actually, you are correct. The economy ( as judged by consumer confidence and business confidence ) began to take just months after the Crypt Keeper took control of the purse strings in January 2007, and nosedived after January 2008. What a shocker, eh? ROFL

November 18 2010 at 3:35 PM Report abuse -3 rate up rate down Reply
foolmeonce

Its funny how this article comes out stating that more Americans are under stress, but the stocks jump on the other hand with some IPO news on GM. Are we hurting or are we not hurting???? Or is it business as usual.

November 18 2010 at 3:23 PM Report abuse +2 rate up rate down Reply
okguy1011

What happens when States with combined $230 billion in budget deficits need to start to cut spending to eliminate the deficits? Politician claimed they would not raise taxes to eliminate these deficits. Since States receive tax revenue from their employess in the the form of income taxes and sales tax revenue, plus they will need to pay laid off employyees unemployment benefits (usually funded on a pay as you go basis), the states will need to cut substantially more than the 230 billion. Perhaps as much 330 to 350 billion in order to reach their budget goals. It seems that is about 40-45% of the prior federal stimulus package. Will this have a positive or negative eefect in the next 12-18 months on the economy?

November 18 2010 at 3:20 PM Report abuse +1 rate up rate down Reply
drbuckles

Republicans are filibustering unemployment.....Merry Christmas........6% of the American people care about the deficit. Jobs please........now.... deficit reduction is all hot air.........

November 18 2010 at 3:18 PM Report abuse +2 rate up rate down Reply
drbuckles

GEE guess what the people who were yelling about the debt and government spending don't want to be in the Appropriations Committee. They don't want to hear it from the voters when they get their SSI, Medicare, Medicaid cut, and don't cut the military industrial complex. The tea party and the Republicans are full of hot air..........when will you learn.........? Now that you have voted feeling voter remorse. The Appropriations Committee is one of the most highly coveted positions in Congress and all of a sudden no Republican wants the job.............nice

November 18 2010 at 3:12 PM Report abuse +6 rate up rate down Reply