Consumers Feel More Confident in Their Jobs and Credit - Cambridge Consumer Credit Index

ISLANDIA, NY – Over two thirds of Americans (69%) feel very or somewhat secure in their jobs, up from 66% who felt so in October 2003, according to the Cambridge Consumer Credit Index. 7% of the respondents said they feel insecure in the jobs, down from 10% a year ago.

When asked how their employment status is impacting their use of credit cards and their willingness to take on other types of debt, 13% of consumers said they are confident enough to take on more debt, up from 9% who expressed increased confidence in October 2003. Conversely, 27% of respondents now say they are less confident and want to reduce their use of credit, down from 33% who expressed less confidence a year ago. 60% of those surveyed say that their current employment status is having no impact on their willingness to use debt, up slightly from 58% last year.

“The results of the Cambridge Consumer Index wildcard show that more Americans feel more confident in their jobs than they were a year ago and are therefore more willing to go into debt to buy what they want and need. The largest boost in confidence is occurring among Americans earning between $50,000 and $75,000 a year and those with the highest levels of education,” says Jordan Goodman, spokesperson/financial analyst for the Cambridge Consumer Credit Index.

These findings are the result of monthly nationwide telephone poll of 800+ adults conducted by ICR/International Communications Research in the past week, sponsored by the Debt Relief Clearinghouse, Ltd.

The overall Cambridge Consumer Credit Index fell by one point in September to 61. The Index rose in the question on expectations to take on debt over the next six months and dropped in the last month and next month question. The “Reality Gap,” which is the difference between the amount of debt consumers say they will pay off in the next month versus the amount of debt they actually paid off a month later, narrowed by 2 percentage points from September to 11 points. A month ago, 78% of Americans planned to pay off debt, while a month later only 67% actually did so.

The Cambridge Consumer Credit Index is a forward looking economic indicator gauging consumer spending and debt. It is released on the fifth business day of every month to coincide with the Federal Reserve Board’s G19 release of consumer credit outstanding data.

Chris Viale, Acting President & C.E.O. of Cambridge Credit Counseling Corp. said, “Although Americans feel slightly more confident in their jobs and credit usage then they were a year ago, they should remain cautious and have an emergency savings built into their budget in the event of a sudden job loss. We recommend to our clients that an emergency savings account with approximately three to six months worth of savings will allow them to live financially stable lives during uncertain times.”

In conjunction with the Index, the Cambridge Credit Counseling Corp. is releasing its monthly survey of people who have called in for credit counseling services over the past month. Cambridge representatives ask callers for the primary reason that they found it necessary to get help with their debts now. Of the 395 people who answered, this was the order of their responses:

1. My income has been reduced from a lower salary, less overtime or layoff (30.4%)
2. I am frustrated with high bank rates and fees (29.4%)
3. I want to improve my ability to achieve future financial goals like buying a house or saving for retirement (13.2%)
4. I got into too much debt by overspending (8.8%)
5. Other (6.1%)
6. Large medical expenses forced me to take on huge debts (4.8%)
7. Recently divorced or widowed (3.8%)
8. My lack of financial education caused me to take on too much debt (3.5%)

For more information on the survey see http://www.cambridgeconsumerindex.com/index.asp?content=client_survey.

For more information about the Cambridge Consumer Credit Index, contact Paramjit Mahli at pmahli@cambridgeconsumerindex.com, 631-786-6450, or the Index website at www.cambridgeconsumerindex.com.