Data from LegalShield’s Economic Stress Index reveals lowest financial stress for consumers, yet forecasts to increase in Fall 2021
New data from LegalShield, the leading provider of membership-based legal services and identity theft protection plans, released a report highlighting consumer financial stress for August 2021 and shares what the data is forecasting for the coming months.
According to the LegalShield Economic Stress Index, August was an all-time low for consumer financial stress amid elevated household incomes and low rates of consumer debt delinquency as the economy rebounds.
“Our data indicates this summer was a strong time for consumers as we all began to spend a little more and feel more ‘normal’ as opposed to last summer. However, with federal assistance in many areas expiring, more financial pressure will be put back on households and businesses. Our data may begin to show us a different trend in the coming months,” said Jeff Bell, CEO of LegalShield.
Key Takeaways and Fall 2021 Trend Predictions
LegalShield Consumer Stress Index
- Job growth sharply slowed in August as concerns and precautions around the Delta variant affected many industries including retail, hospitality, and food services.
- Despite slowing job growth, consumers continued to spend more on non-essential items as incomes grew. Pandemic-era federal protections and expanded benefits, like SNAP and the Child Tax Credit payments, were likely factors.
LegalShield Bankruptcy Index
- The Bankruptcy Index fell to its lowest level ever, decreasing (improving) 3.7 points to 19.1 in August.
- Total seasonally adjusted bankruptcy filings fell by 6.4% to 32,503 in July and were down 14% compared to a year ago. Reuters reported in early August that total non-business filings plunged 33% to about 444,000 for the year ending in June.
- Bankruptcies have remained low since federal protections, including income supplements, moratoria on evictions and foreclosures, and loan forbearance programs were introduced last year. Many consumers increased savings in the early months of the pandemic by reducing discretionary spending and paying down debt. However, throughout the spring and summer, consumers began to return to pre-pandemic economic activity and spending has risen.
- Bankruptcies are forecasted to remain low in the near term, although they may begin to rise later this year or in 2022 given the expiration of federal protections.
LegalShield Foreclosure Index
- The LegalShield Foreclosure Index remained mostly unchanged in July at a historically low level and improved slightly by 0.2 points to 32.6 in August. The expiration of the foreclosure moratorium may increase foreclosures in the coming months; however, the healthy housing market should prevent a surge.
- While the foreclosure moratorium and other government provisions kept foreclosures muted during the pandemic, the expiration of those programs may bring an increase in foreclosure activity this year. Black Knight reports that 1.45 million homeowners were 90 days or more past due on their payments in the beginning of August, which was more than a million above the pre-pandemic level.
LegalShield Housing Construction Index
- The LegalShield Housing Construction Index recorded all-time high in August, increasing 1.5 points to 145.5.
- Housing starts fell 7% in August to the lowest level recorded since April 2021. However, housing starts were up 2.5% compared to year-ago levels.
LegalShield Housing Sales Index
- The Housing Sales Index experienced another record high, increasing by 1.4 points in August to 120.3.
- Existing home sales rose 2% in July and were 1.5% above year-ago levels. Home sales are forecasted to remain strong for the next few months, though sales may ease compared to the swift pace earlier this year due to affordability constraints.
- Low interest rates, desire for more space, and accumulated savings have contributed to strong housing demand.
- Looking ahead, though affordability concerns may be weighing on homebuying activity on the margins, housing sales will likely remain healthy for the foreseeable future.
The LegalShield Economic Stress Index is comprised of economic and financial status of U.S. households and small businesses and provides actionable intelligence to see the direction of the U.S. economy in the near term. The five sub-indices highlighted include Consumer Stress Index, Bankruptcy Index, Foreclosure Index, Housing Construction Index and Housing Sales Index, and are constructed from LegalShield’s proprietary data. The sub-indices reflect the demand for various legal services over the past 15 years and is based on data collected through LegalShield’s provider law firms in all 50 states.
About LegalShield
A trailblazer in the democratization of affordable access to legal advice, counsel, protection, and representation, LegalShield is the world's largest platform for legal, identity, and reputation management services protecting individuals and businesses across North America. Founded in 1972, LegalShield, and its privacy management company, IDShield, has provided individuals, families, businesses, and employers with tools and services needed to affordably live a just and secure life. Through technology and innovation, LegalShield is disrupting the traditional legal system and transforming how and where people receive legal guidance and services, with access to thousands of qualified, trusted attorneys and law firms. To learn more about LegalShield and IDShield products and services, visit LegalShield.com and IDShield.com.