LegalShield Data Report Shows Consumer Financial Stress Hits Year High
New data from LegalShield’s Economic Stress Index Report provides insight into how Americans are feeling in today’s economic climate.
Here are the top takeaways from the June 2022 report:
Consumer Stress Index
- The LegalShield Consumer Stress Index worsened in June to its highest level in a year due to inflation and rising prices for rent, energy, and household essentials. People are feeling the financial burden, yet the strong labor market has kept many from experiencing harder times. Our data suggests financial stress will continue to rise throughout the year.
- The LegalShield Bankruptcy Index worsened in June, however, continues to remain historically low. Bankruptcies are unlikely to increase in the near term, as they are an end-stage measure of financial stress.
- The LegalShield Foreclosure Index improved in June, holding below its pre-pandemic level. Foreclosure activity has been gradually returning to its pre-pandemic trend after the expiration of government support. Even with high home prices, foreclosure activity does not expect to increase and will continue with a slow and steady normalization over the months ahead.
Housing Construction Index
- The LegalShield Housing Construction Index worsened in June. Pent-up demand has sustained the homebuilding industry even as interest rates rise. Though strong demand and low housing inventories have sustained housing construction throughout much of the pandemic, building activity has faced strong headwinds in recent months due to material supply delays and high building costs. Bank of America estimates that raw materials for the average single-family home in the U.S. now cost about $118,000 (up 42% from 2018), and the producer price index for construction materials reached a new all-time high in May.
Housing Sales Index
- The LegalShield Housing Sales Index worsened 0.4 point to 110.9 in June. Existing home sales fell 3.4% in May 2022, down 8.6% compared to year-ago levels. After two years of demand and rapidly rising home prices, affordability is a growing concern that will likely weigh on the market for the foreseeable future. Along with sky-high prices, the Fed’s efforts to combat inflation have driven the average 30-year fixed-rate mortgage well above 5%, effectively pricing many would-be homebuyers out of the market. Data suggests housing sales to slow gradually over the next year.
“With inflation being high and the cost of living rising, people have become more selective with their spending. It’s less about the ‘wants’ and making sure the ‘needs’ are met,” said Matt Layton, SVP of Data, Insights, and Intelligence at LegalShield. “We can expect people to continue to tighten their pockets as we go through the second half of the year. During this time, if someone is struggling financially, speaking to a lawyer and creating an action plan is a smart step.”
LegalShield Economic Stress Index offers a real-time pulse of the economic and financial stress Americans feel due to changes in the market and economy and can identify near-term trends ahead of other indicators with proven accuracy.
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