LegalShield Law Index Shows Consumer Financial Stress Worsened Significantly In August–While Consumer Confidence Continues To Be Overstated
ADA, Okla., Sept. 11, 2017 /PRNewswire/ — The LegalShield Law Index for August, released today, suggests as it has for the last few months that there will be a downward correction in consumer confidence, which remains high despite middling consumer spending and retail sales data. The LegalShield data, based on demand for legal services, indicate that retail sales and other consumer activity may fall short of expectations this holiday shopping season.
While consumer finances are generally healthy, there remains a noteworthy divergence between LegalShield data and the Conference Board’s Consumer Confidence Index, which improved in August despite only moderate retail growth. LegalShield data continue to signal a pending correction in Consumer Confidence, as historically when these two indices diverge, it is typically Consumer Confidence that moves into line with LegalShield data, as it has in the past, most notably in the run-up to the 2008-09 recession.
“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.
“Consumer spending accounts for more than two-thirds of U.S. economic activity,” Rosseau said. “The LegalShield Consumer Financial Stress Index tends to lead the Conference Board’s Consumer Confidence Index by one to three months and provides a useful ‘hard’ data check on survey-based, ‘soft’ data measures that are not always consistent with underlying economic conditions.”
“We are coming to believe that confidence remains near record-highs due to stubborn optimism on the part of survey respondents,” Rosseau noted. “Our data indicate that consumers have reason to be confident about the economy, and of course we hope for continued economic strength. That said, our data, along with other measures of consumer health (such as the University of Michigan’s Survey of Consumer Sentiment), have worsened in recent months. In light of these developments, we want to make decision makers aware that consumer spending will likely continue to fall short of the levels implied by consumer confidence. In short, the consumer picture is pretty good, but not gangbusters.”
Having debuted with the release of data for May, the LegalShield Law Index is made up of five indices, including the LegalShield Consumer Financial Stress Index, LegalShield Housing Activity Index, LegalShield Bankruptcy Index, LegalShield Foreclosure Index, and the LegalShield Real Estate Index. To depict the health of the U.S. economy, each index relies on LegalShield’s unique and proprietary database of member demand for and usage of legal services.
Additional predictive takeaways based on the data through August:
- 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 five LegalShield indices closely track a handful of key economic indicators, such as the Consumer Confidence Index (developed by the Conference Board), Housing Starts (reported by the U.S. Census Bureau), and Foreclosure Starts (reported by the Mortgage Bankers Association). Each LegalShield index has undergone a battery of statistical tests to validate its relationship to an existing economic indicator that sheds light on the health and direction of the U.S. economy. LegalShield publishes the Law Index monthly, on the sixth business day of each month. Please contact Jeff Monford at firstname.lastname@example.org for a copy of the economic assessment.
A pioneer in the democratization of affordable access to legal protection, LegalShield is one of North America’s leading providers of legal safeguards and protection against identity theft solutions for individuals, families and small businesses. The 45-year-old company protects more than 1,652,000 individual, families and businesses through its legal plans, while IDShield provides identity protection to one million individuals. In addition, LegalShield and IDShield serve more than 141,000 businesses. Both legal and identity theft plans start as low as $20 per month.
LegalShield’s legal plans provide access to attorneys with an average of 19 years of experience in areas such as family matters, estate planning, financial and business issues, consumer protection, tax, real estate, benefits disputes and auto/driving issues. Unlike other legal plans or do-it-yourself websites, LegalShield has dedicated law firms in 50 states and four provinces in Canada that members can call for help without having to worry about high hourly rates.
IDShield provides identity monitoring and restoration services and is the only identity theft protection company armed with a team of licensed private investigators on call to restore a member’s identity.
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