Consumer Financial Stress Stays Muted in June, Poised to Rise Without Additional Stimulus Measures

Released today, the June 2020 LegalShield Law Index, a suite of leading indicators of the economic and financial status of U.S. households and small businesses, saw its Consumer Financial Stress Index remain largely unchanged in June, reflecting the substantial uncertainty surrounding the future American consumers face. Notwithstanding, it is clear that much hangs in the balance as policymakers debate their continued support of consumers with unprecedented levels of federal stimulus, payment deferral and debt forbearance, as well as a gradual reopening of economies. LegalShield has been measuring the demand for various legal services for nearly 16 years, collecting real-time data from consumers on those issues of greatest concern.

“The next two months could be make-or-break for the American consumer,” said LegalShield CEO Jeff Bell. “Depending on the legislation that emerges from Washington D.C., we could either be on the precipice of a major deterioration in consumer confidence or a continuation of the gradual economic recovery we have seen with returning employment, strengthening housing and improving business activity. With coronavirus cases spiking in many states, parents and teachers anxious about school reopening, and upcoming election uncertainty, it is clear that Congress needs to act once again to keep momentum and prevent backsliding.”

The LegalShield Law Index reflects the demand for legal services among the company’s provider law firms in all 50 states. The Law Index is a suite of leading indicators of the economic and financial status of U.S. households and small businesses, including the LegalShield Consumer Financial Stress Index, Housing Activity Index, Real Estate Index, Foreclosure Index and Bankruptcy Index. The five sub-indices tend to lead an existing economic indicator that sheds light on the health of the U.S. economy. Highlights from June are as follows:

Consumer Financial Stress Index: In June, the LegalShield Consumer Financial Stress Index inched up (worsened) 0.2 points to 66.5, up from 66.3 in May. There is evidence, however, of a slowdown over the last 2 to 3 weeks, as rising infection rates in several major states have reduced consumer mobility and spending. If these trends continue, the pace of jobs growth will slow and may stall, which would likely cause consumer confidence to fall.

Housing Activity Index: The LegalShield Housing Activity Index increased 1.8 points to an all-time high of 126.7 in June, from 124.9 in May, reflecting the continued strength in homebuilding first identified last month. LegalShield and broader economic data suggest that the homebuilding sector has the potential to recover more quickly than the overall economy.

Real Estate Index: The LegalShield Real Estate Index improved to near pre-pandemic levels after bottoming out in April, increasing 2.8 points to 106.4, up from 103.6 in May. The index suggests that existing home sales are well-positioned to bounce back during the second half of the year, especially if record-low mortgage rates continue.

Bankruptcy Index: The LegalShield Bankruptcy Index slipped 2.2 points from 25.6 in May to 23.4 in June, falling to a new all-time low for the third consecutive month. While nearly 18 million people are unemployed, consumers continue to benefit from an unprecedented level of federal government support, as well as lender-offered debt forbearance and payment deferral programs.

Foreclosure Index: The LegalShield Foreclosure Index was mostly unchanged, suggesting that payment relief offered from stimulus measures and extended forbearance continues to help consumers hold their own in the housing market. The index increased 1.4 points to 40.0 in June, from 38.6 in May, remaining at a historically low level. Given that unemployment is expected to hover around 10% this year, however, foreclosures will almost certainly rise in the months ahead.

For full LegalShield Law Index findings visit https://www.legalshield.com/law-index.

About LegalShield and IDShield

A trailblazer in the democratization of affordable access to legal protection, LegalShield is one of North America’s largest providers of online legal subscription plans covering more than 4.4 million people. Its IDShield identity theft solution for individuals and families has more than one million members. LegalShield and IDShield serve more than 141,000 businesses. In addition, over 40,000 companies offer LegalShield and IDShield plans to their employees as a voluntary benefit. Both legal and identity theft plans start for less than $25 per month. For more information about LegalShield, visit: https://www.legalshield.com/ or for more information about IDShield, visit: https://www.idshield.com/.

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