Freedom Financial Network Quarterly Comment: Cautious Consumers Heading into Fall

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Latest federal debt, spending figures suggest people are conserving finances, FFN says

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Taken together, indicators provide a very mixed impression of the state of the economic recovery.

As summer winds down and the United States approaches the final stretch of the presidential election season, several changes in financial data indicate that U.S. consumers might be battening down the hatches for fall, according to the Freedom Financial Network Quarterly Comment on consumer debt and credit issues.

“For the first time in a long time, people are slowing their use of non-revolving credit, such as vehicle and education loans, and notably reducing their credit card debt,” said Kevin Gallegos, vice president of Phoenix operations for Freedom Financial Network (FFN). “Reports show that credit card defaults last month were at near-record lows, suggesting that people are more cautious about going into debt.”

The latest financial data released by national sources indicates that slightly lower levels of unemployment (due primarily to fewer people seeking work), slightly higher personal income and slightly higher personal spending are accompanying lower consumer debt this quarter. “Taken together, these indicators provide a very mixed impression of the state of the economic recovery,” added Andrew Housser, FFN co-founder and CEO.

Gallegos and Housser noted that the latest Consumer Confidence Index released by the Conference Board supports this view. The most recent survey shows consumer confidence at its lowest level since November 2011, primarily because consumers are less optimistic about business and employment prospects.

Recent financial data as reported:

1. Total consumer debt decreases, for a change. The latest data release from the Federal Reserve Board indicates a decrease of 1.5 percent, year over year, in total consumer debt. This marks the first time consumer debt has decreased since 2010. In July, the most recent month on record, total consumer debt (excluding mortgage debt) was $2.7 trillion.

2. Revolving debt declines for second month in a row. Total consumer revolving debt – which includes credit card debt – declined again. After rising sharply (by 13.8 percent) in May, total revolving debt declined by 4.5 percent in June and again by 6.8 percent in July.

3. Non-revolving credit growth slows. Since 2010, non-revolving consumer debt – which includes auto and RV loans and education loans – has climbed steadily. Non-revolving debt reached another all-time high of $1.85 trillion in July. This month, however, the increase in non-revolving debt was just 1.0 percent. This is in contrast to recent increases of more than 7 percent per month for the past year.

4. Personal income continues gradual climb. In both June and July (the most recent data available), the Bureau of Economic Analysis reports, personal income rose by 0.3 percent. Disposable personal income also increased by 0.3 percent in June and July.

5. Spending increases slightly more than income. In July, personal consumption expenditures rose by 0.4 percent.

6. Unemployment rate dips (but for the wrong reason). The U.S. unemployment rate crept down in August, to 8.1 percent. That puts unemployment now at the low end of the narrow band (8.1 percent to 8.3 percent) where the unemployment situation has held steady throughout 2012. However, the reason for the dip was primarily due to discouraged workers who have stopped looking for work. The official unemployment rate only includes people who are actively seeking employment. The percentage of adults looking for work in August was only 63.5 percent, the lowest level in over three decades.

The FFN Quarterly Comment pulls together significant statistical releases and provides quarterly comment on timely debt and credit issues that matter to consumers. To schedule an interview with Kevin Gallegos or Andrew Housser, contact Aimee Bennett at 303-843-9840 or aimee(at)faganbusinesscommunications(dot)com.

Freedom Financial Network (
Freedom Financial Network, LLC (FFN), provides comprehensive consumer credit advocacy services. Through its Freedom Debt Relief, Freedom Tax Relief and ConsolidationPlus products, FFN works as an independent advocate to provide comprehensive financial solutions, including debt settlement, debt resolution and tax resolution services for consumers struggling with debt. The company, which has resolved more than $1.5 billion in debt for more than 120,000 clients since 2002, is an accredited member of the American Fair Credit Council, and a platinum member of the International Association of Professional Debt Arbitrators. The company holds the Goldline Research Preferred Provider certification for excellence among debt relief companies.

Based in San Mateo, Calif., FFN also operates an office in Tempe, Ariz. The company, with more than 500 employees, was voted one of the best places to work in the San Francisco Bay area in 2008, 2009 and 2012, and in the Phoenix area in 2008, 2009 and 2010. FFN’s founders received the Northern California Ernst & Young Entrepreneur of the Year Award in 2008.


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