Consumer Economic Snapshot: Comparing Aprils

Patrick Lunsford

Each quarter, Know Your Debtor – a newsletter produced by insideARM.com in collaboration with LexisNexis – provides a statistical snapshot of the financial health of the U.S. consumer. As economies are fluid, we thought it would be interesting to compare last year’s data with the most recent period where data is available: April 2011.

This kind of comparison is especially important now, as economic data over the past month has disappointed, and even inspired talks of a double dip recession, or another one altogether. So how are we doing compared to this time last year?

We’ll start with the unemployment rate; perhaps the most important economic statistic of this entire downturn.

There has been quite a bit of improvement in the unemployment rate over the past year. It is debatable whether this has been driven by true job creation or by a shrinking labor pool as the long-term unemployed drop out of the measurement range. Still, any improvement is good, especially for accounts receivable management professionals.

In April 2010, the seasonally adjusted headline unemployment rate was 9.8 percent. In April 2011, that same measure had fallen to 9 percent. Meanwhile, the underemployment rate – which includes discouraged workers not included in the headline employment figure and those working part time against their wishes – dropped from 17 percent to 15.9 percent.

To add context to the percentages, the Labor Department reported that the total number of unemployed people in the U.S. fell by 1.3 million from April 2010 to April 2011. This means that roughly 1.3 million more Americans had jobs in April 2011 compared to last year; an encouraging sign.

Bankruptcies also declined year-over-year. There were 134,720 consumer bankruptcy filings recorded in April 2011 compared with 144,490 in April of last year. And credit card delinquencies have improved dramatically from last year. The Federal Reserve reported an average credit card delinquency rate for its member banks of 3.83 percent at the end of the first quarter of 2011 compared to a 5.79 percent rate a year earlier.

So data suggests broad — although still maddeningly shallow – improvements in overall consumer financial health. How are ARM companies doing?

In the results of insideARM’s Credit & Debt Collection Industry Confidence Survey for Winter 2011, collection agency performance scores for the first quarter of 2011 are 11.2 percent higher than the scores given in the same survey a year ago. Anecdotal evidence from the survey and from conversations we’ve had with collection professionals also suggests that collection rates this tax season are significantly better than last year.

What did your firm experience in April 2011 compared to April 2010? Feel free to chime in on the comment section below.

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