Finance Blog
Hardest Hit States Are Showing Signs of Economic Recovery
Hardest Hit States Are Showing Signs of Economic Recovery
By Janet Dedrick, Equifax Credit Team
If you tune into the news, or just take a look around your neighborhood and watch businesses coming and going, it can be hard to tell what’s really happening with the economy. For every sign of life, there seems to be another dark cloud. My fellow blogger Ilyce Glink has her eye on the real estate market, but, as we’ve seen over the last few years, jobs, real estate, debt, and credit are all tied together in the economy’s rise and fall.
It’s still too soon to call the end of the credit crisis, but when I look at the overall credit market, I’m seeing some positive signs. Consumer credit scores continue to improve, and average risk scores are also improving.
Why should you care? The underlying results of these improvements include lower delinquencies, lower write-offs, and revolving deleveraging of debt accompanying lower credit utilization.
Translation: Consumers are showing signs of making smarter credit decisions and reducing their debt.
Here’s a little insight into the data I see that makes me optimistic about consumer credit scores:
- In 2005, 30 percent of Major Metropolitan Areas (MSAs) did not see a decline in average credit scores. For the 70 percent of MSAs that did see credit score declines, the areas worst hit (California and Florida) saw credit score declines over a period of more than three years.
- The worst point in time for credit scores was June 2008, when 42 percent of MSAs experienced year-over-year score declines.
- Since December 2010, average credit scores for all MSAs have been increasing.
- Larger average credit score increases are being seen in the areas where the housing crisis has been the worst–California and Florida, again, as well as Nevada.
Overall, these recent credit score trends are a sign that we’re seeing movement toward economic recovery. The recession resulted in pervasive score declines in geographic pockets like California, Florida, and Nevada, but the areas with the worst score declines are now seeing larger score increases.
Make sure to come back next month, when I take a look at how specific industries and manufacturing have affected the economy.
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