The LegalShield Law Index has appeared in the following publications:
Consumer Financial Stress Stays Muted in June, Poised to Rise Without Additional Stimulus Measures
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After Largest-Ever Increase in March, Consumer Financial Stress Index in April Falls Most in 16th-Year History of the LegalShield Law Index
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However, LegalShield Data Likewise Indicate Consumers Are Facing Intense Financial Pressure That Could Drive Bankruptcy and Foreclosure Activity If Unaddressed
ADA, Okla. – July 14, 2020 – 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 reopenings 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.
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LegalShield Housing Activity Index Falls to its Lowest Point since 2017
The LegalShield Housing Activity Index, a leading indicator of housing starts, fell 1.9 points from 111.9 (Q4 2019) to 110.0 (Q1 2020), and is down nearly 8 points from its post-recession peak in Q3 2019.
Though housing starts eased 1.5% in February, at 1.6 million they remain well above post-recession trends. However, the pandemic threatens to significantly undercut near-term homebuilding activity. The effects of moratoria on construction activity imposed by state and local governments have already taken hold: the price of lumber was down 41% in late-March from February levels, pointing to plummeting demand for building materials despite the approaching spring building season. LegalShield expects new construction activity to fall sharply over the next few weeks.
LegalShield Real Estate Index improves slightly – but expected to weaken
The LegalShield Real Estate Index, a leading indicator of existing home sales, rose 6.5 points to 102.4 in Q1 2020, up from 95.9 in Q4 2019. Meanwhile, existing home sales increased 6.5% in February to a 5.77 million annualized rate, the highest level since 2007. Despite the rebound in the Real Estate Index this month, home sales – like much of the rest of the economy – are expected to grind to a near standstill in the coming weeks. Positive developments in the housing market during the second half of 2019 and early 2020 are likely to reverse as stay-at-home orders covering more than 90% of the US population will cause home viewings to plummet. As a result, although mortgage rates are near all-time lows, few prospective home buyers are likely to purchase a home until shelter-in-place-orders are lifted.
LegalShield Bankruptcy Index signals subdued bankruptcy activity will spike in months ahead
The LegalShield Bankruptcy Index, a forward-looking indicator of bankruptcy filings, decreased (improved) roughly 15 points from 48.1 in Q4 2019 to an all-time low of 33.5 in the first quarter. However, while the demand for bankruptcy-related legal services may not have risen yet, it is clear from broader economic trends that bankruptcies (a lagging indicator of financial stress) may rise later this year as the pandemic triggers a sharp increase in unemployment, causes some consumers to rely more heavily on credit, and impairs their ability to service existing debt. Indeed, there are already signs that this is occurring: monthly intakes for LegalShield’s “Credit reports and repair” legal services are up 46% from a year ago after falling to an all-time low in December.
LegalShield Foreclosure Index indicates that foreclosure activity is likely to rise as the economic impacts of COVID-19 take hold
The LegalShield Foreclosure Index jumped (worsened) 20.3 points, rising from 47.9 in Q4 2019 to 68.2 in Q1 2020 as the coronavirus pandemic gripped the U.S. economy. Rapidly rising unemployment will undoubtedly make it more difficult for millions of Americans to service their mortgages. According to Bloomberg, as many as 30% (or 15 million) of Americans with home loans could halt their mortgage payments should stay-at-home measures continue beyond the summer.
Law Index History
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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 4.375 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.
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