Ohio State survey: Consumers feel better about their debt, but stress is still high
COLUMBUS, Ohio – After hitting record-setting levels of stress this past summer, American consumers seemed to be worrying less in September about the debts they owe, according to a nationwide survey.
The Consumer Debt Stress Index (DSI) fell 10 percent in September, indicating that Americans are feeling slightly better about what they owe on their credit cards, mortgages, home equity loans, car and student loans and other sources of debt.
"Consumers are feeling less anxious than they did, but the high levels of debt stress on consumers are still troubling," said Lucia Dunn, professor of economics at Ohio State University and one of the leaders of the study.
The DSI is conducted by Ohio State's Center for Human Resource Research and is based on telephone interviews of randomly selected Americans. Each month's index score is based on the past three months of interviews, with the average sample size being 658.
The DSI has been conducted monthly since November 2005, and its base value is set at 100 in January 2006.
Debt stress has been on the rise since the fall of 2007 when the DSI rose above the 100 mark. It hit 155.3 in July of this year – 55 percent higher than the debt stress levels on consumers in January 2006 and the highest it has been since the inception of the current index. The stress score declined to 147.6 in August and again to 132.8 in September.
"Reports on the economy have become more encouraging, with the retail and housing sectors showing renewed signs of life," Dunn said. "The good news clearly brought some psychological relief to consumers."
However, the debt stress levels are still relatively high, and that could bode ill for the holiday shopping season, she said.
"People may still be cautious with their spending, especially if unemployment continues to be high as has been forecast by many economists."
In addition, the long recession and the stress it brings have even affected how consumers view their health.
About 26 percent of the September DSI respondents said that their debt has affected their health to some extent – an increase of 3 percent since a year ago.
About 10 percent of those asked said debt has been an "extreme problem" for their family life, and 6 percent say it has been an extreme problem for their job performance – both substantial increases over the same period last year.
Women are more affected by debt stress than men, the survey has found. Women's debt stress is about 34 percent higher than men for the same level of debt to income.
"In these difficult economic times, women appear to face a greater psychological struggle over their debt than do men, and it can't be explained by differences in their debt relative to their income," Dunn said.