From The Ohio State University:
The Consumer Debt Stress Index (DSI) fell 10 percent in September, indicating that Americans are feeling slightly better about what they owe on their credit cards, mortgages, home equity loans, car and student loans and other sources of debt.
“Consumers are feeling less anxious than they did, but the high levels of debt stress on consumers are still troubling,” said Lucia Dunn, professor of economics at Ohio State University and one of the leaders of the study.
The DSI is conducted by Ohio State’s Center for Human Resource Research and is based on telephone interviews of randomly selected Americans. Each month’s index score is based on the past three months of interviews, with the average sample size being 658.
The DSI has been conducted monthly since November 2005, and its base value is set at 100 in January 2006.
Debt stress has been on the rise since the fall of 2007 when the DSI rose above the 100 mark. It hit 155.3 in July of this year – 55 percent higher than the debt stress levels on consumers in January 2006 and the highest it has been since the inception of the current index. The stress score declined to 147.6 in August and again to 132.8 in September.
“Reports on the economy have become more encouraging, with the retail and housing sectors showing renewed signs of life,” Dunn said. “The good news clearly brought some psychological relief to consumers.”
However, the debt stress levels are still relatively high, and that could bode ill for the holiday shopping season, she said.
“People may still be cautious with their spending, especially if unemployment continues to be high as has been forecast by many economists.”
In addition, the long recession and the stress it brings have even affected how consumers view their health.
About 26 percent of the September DSI respondents said that their debt has affected their health to some extent – an increase of 3 percent since a year ago.
About 10 percent of those asked said debt has been an “extreme problem” for their family life, and 6 percent say it has been an extreme problem for their job performance – both substantial increases over the same period last year.
Women are more affected by debt stress than men, the survey has found. Women’s debt stress is about 34 percent higher than men for the same level of debt to income.
“In these difficult economic times, women appear to face a greater psychological struggle over their debt than do men, and it can’t be explained by differences in their debt relative to their income,” Dunn said.
From The Ohio State University:
The Consumer Debt Stress Index (DSI) fell 10 percent in September, indicating that Americans are feeling slightly better about what they owe on their credit cards, mortgages, home equity loans, car and student loans and other sources of debt.
“Consumers are feeling less anxious than they did, but the high levels of debt stress on consumers are still troubling,” said Lucia Dunn, professor of economics at Ohio State University and one of the leaders of the study.
The DSI is conducted by Ohio State’s Center for Human Resource Research and is based on telephone interviews of randomly selected Americans. Each month’s index score is based on the past three months of interviews, with the average sample size being 658.
The DSI has been conducted monthly since November 2005, and its base value is set at 100 in January 2006.
Debt stress has been on the rise since the fall of 2007 when the DSI rose above the 100 mark. It hit 155.3 in July of this year – 55 percent higher than the debt stress levels on consumers in January 2006 and the highest it has been since the inception of the current index. The stress score declined to 147.6 in August and again to 132.8 in September.
“Reports on the economy have become more encouraging, with the retail and housing sectors showing renewed signs of life,” Dunn said. “The good news clearly brought some psychological relief to consumers.”
However, the debt stress levels are still relatively high, and that could bode ill for the holiday shopping season, she said.
“People may still be cautious with their spending, especially if unemployment continues to be high as has been forecast by many economists.”
In addition, the long recession and the stress it brings have even affected how consumers view their health.
About 26 percent of the September DSI respondents said that their debt has affected their health to some extent – an increase of 3 percent since a year ago.
About 10 percent of those asked said debt has been an “extreme problem” for their family life, and 6 percent say it has been an extreme problem for their job performance – both substantial increases over the same period last year.
Women are more affected by debt stress than men, the survey has found. Women’s debt stress is about 34 percent higher than men for the same level of debt to income.
“In these difficult economic times, women appear to face a greater psychological struggle over their debt than do men, and it can’t be explained by differences in their debt relative to their income,” Dunn said.
The current unempoyment rate is about the same as in 1981; yet, the loan losses and delinquency rates are almost triple. It appears that predatory or loose underwriting has placed more people in deeper debt. Let’s examine:
1) We all know about predatory credit card practices and the growth in the average credit card debt per household. Much of that extra debt is “interest’ and fee harvests by ‘you know who”.
2) Extended term financing or sub-prime rates to sell cars for short-term dealer profit.
3) Auto leases for individuals who “needed them” because their house payments were too high. Good leasing companies repo lease cars faster than they repo a loan. More stress.
4) Home Equity loans (which started in the mid-1970’s were still conservative in 1981) has allowed people to suck out their home equity to finance lifestyle and few bankers remembered that the word “No” was a good service which bankers used to provide. Home equity was the the average families’ survivor vest. Lenders let them “squander” it by failing to educate and provide prudent financial advise.
4) Big mortgages -Too much home, too little downpayment, and non-bank loose underwriting.
This and much more “unsuitable” lending has placed many more consumers in debt – deep debt.
I do not know why females are more anxious than men except that usually divorced females have more responsibility for children and not being able to buy them new “shoes” etc. would place many mothers under more stress because they see it every day versus fathers that “write a check”. Even two-income families are concerned about job continuity and have to say “No” to expensive school trips or after school activities which places them under social pressure. I live in one of those “high-income zip codes” where is used to be that neighbors would not be caught shopping at lower rated retail stores. Now WalMart has a full parking lot every day as “universal stress” has made it OK to shop at WalMart for neighborhoods in the top income quintile.
Finally, women are more willing to be open about stress. Men keep it inside and you learn about it when they have an earlier death than women. It will be interesting to see if there is a “spike” in male death rates during this recession.