New Poll Shows that Debt Relief is On The Way

Market May be Bottoming Out

The Economic Stress Index predicts that debt relief may be on its way for beleaguered consumers. (Photo:

The Economic Stress Index predicts that debt relief may be on its way for beleaguered consumers. (Photo:

Debt relief may be on the way according to a new AP poll called the Economic Stress Index.  This index is a calculation that ranges from 1 to 100 and is based on the nation’s approximately rates of unemployment, foreclosures and bankruptcy totals.  The lower the score, the less economic stress the country as a whole is under.  The Index was 10.3 in March 2009 and 9.7 in April.  Mark Vitner, a Wachovia economist, has stated that the resulting dip of 0.6 in the Economic Stress Index “[shows that] we are very close to the low point in this recession… the worst is past, but that doesn’t mean the troubles are over.”

Further assessment shows that any county with a Stress Index of over 11 is considered “highly stressful” and more than 40 percent of the nation’s counties are at that level.  The highest scoring counties were in California, northern Indiana and North Carolina.  Each one saw their Stress Index well into the teens.  Vitner confirmed that “the biggest stressor is unemployment…because it has been felt all throughout the nation, it is bringing any financial calculations way down and giving us a grim report of the economy.”

Future Hope

Despite the numbers, many analysts are claiming that the economy is seeing its low-point.  They are hopeful that the drastic highs of unemployment, foreclosure and bankruptcy are on the swing downward and will bring the economy to normalcy soon.  Gerald Daughterly, financial analyst for Citigroup, stated, “We aren’t totally out of the woods yet, but the numbers are showing a slight leveling off…that doesn’t mean things aren’t difficult, but it means they most likely won’t get any worse.”

Many consumers are welcoming any sign of an economic recovery and hoping it will benefit their stressed financial states.  While banks and credit cards may not be lending just yet, many Americans hope that the stabilizing economy will open the door to debt relief once again.  They are looking for lenders to start underwriting and allowing them to put money back into the economy, instead of pinching pennies.  Single mother of three Anne Newirth of San Francisco, California stated, “I want to start putting money back into the economy like the government is urging us to do…but I can’t do it without the fall-back plan of credit cards. I know that once those are back in place, I can start living like I normally do and splurging a little.”

Will Lenders Bite?

The biggest question remains, will lenders return to normalcy?  Many experts say that the reforms on credit card policy will make it difficult for potential borrowers with compromised credit.  Only those with great credit will benefit from future credit lenders.  Brandy McNamara, economist for stated, “The credit card and mortgage lending industries will not return to normal, regardless of what offers are out there. Read the fine print and you’ll see how many new rules there are to having credit.  They are protecting themselves and won’t fall back into lending patterns they held before the recession.”  McNamara is not alone in her analysis and proof is in the new contracts many credit applicants will have to sort through prior to getting funds.  Debt relief will be difficult for everyone due to lenders’ cautious new policies.

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