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NEWS RELEASE
LEGALSHIELD LAW INDEX SHOWS CONSUMER CONFIDENCE CONTINUES TO BE OVERSTATEDCorrection in Confidence Expected by October
ADA, OKLAHOMA (July 11, 2017) The LegalShield Law Index for June, released today, suggests that there is likely to be a downward correction in consumer confidence, which could negatively impact retail sales and other consumer activity in the coming months. Although the LegalShield Consumer Financial Stress Index (a component of the Law Index) remains at historic lows, there continues to be a significant divergence between the “hard data” (i.e., usage data based on actual consumer behavior) captured by the Index and the “soft data” (i.e., survey data based on consumer attitudes and expectations) captured by consumer confidence measures. This divergence suggests that consumer confidence is likely to decline and come in line with the LegalShield Consumer Financial Stress Index in the next one to three months, as it has in the past, most notably in the 2008 recession.
Markets are in “wait and see” mode as Federal Reserve Chair Janet Yellen prepares to testify later this week, and the possibility of a correction in consumer confidence has potential implications for the Federal Reserve’s decision about whether to raise interest rates or wind down the Fed’s balance sheet. The LegalShield Law Index sheds new light on this decision, as it suggests that consumer confidence may be temporarily inflated. Specifically, the LegalShield data point to a correction in consumer confidence that will bring it into closer alignment with market realities by the fall.
“There continues to be a gap between the LegalShield Consumer Financial Stress Index and consumer confidence,” explained James Rosseau, LegalShield’s chief commercial officer. “When these gaps have emerged in the past, it is typically consumer confidence that comes back into line with the Consumer Financial Stress Index. This suggests that consumer confidence will likely soften in the coming months. If that occurs, retail sales could weaken in the latter part of the year.”
Having debuted last month with the release of data for May, the LegalShield Law Index joins other leading economic indicators in providing a forward-looking snapshot of the economic and financial status of U.S. households and small businesses. The Index is made up of five indices, including the LegalShield Consumer Financial Stress Index, LegalShield Housing Activity Index, LegalShield Bankruptcy Index, LegalShield Foreclosure Index, and the LegalShield Real Estate Index. To depict the health of the U.S. economy, each index relies on LegalShield’s unique and proprietary database of member demand for and usage of legal services.
Contact(s): Jeff Monford/Stefan Pollack The Pollack PR Marketing Group 212-601-934/ 310-556-4443
The key predictive takeaways from the first public release of data, through June 2017, are as follows:
• Consumer confidence should ease in the next one to three months, but will likely remain strong by historical standards given that consumer financial stress remains muted relative to its long-term average.
• Housing construction — which has risen at a stubbornly slow pace since 2012 and remains well below pre-recession levels — may pick up in the months ahead.
• Bankruptcies are likely to remain muted in the near term. However, bankruptcies may well increase in the medium term, particularly if certain measures of financial stress (e.g., student loan debt, auto loan debt, or credit card debt) begin to climb.
• Foreclosures should remain subdued in the short term, but may begin to rise in the second half of the year.
• Home sales should continue to slowly improve in the months ahead. However, a strong sales resurgence is unlikely to occur in the near term.
The five LegalShield indices closely track a handful of key economic indicators, such as the Consumer Confidence Index (developed by the Conference Board), Housing Starts (reported by the U.S. Census Bureau), and Foreclosure Starts (reported by the Mortgage Bankers Association). Each LegalShield index has undergone a battery of statistical tests overseen by a PhD economist to validate its relationship to an existing economic indicator that sheds light on the health and direction of the U.S. economy. LegalShield will publish the Law Index monthly, on the sixth business day of each month. Please contact Jeff Monford at [email protected] for a copy of the economic assessment.
About LegalShield
LegalShield is one of the North America’s leading providers of legal safeguards for individuals, families and small businesses. The company also offers one of the industry’s most affordable and comprehensive identity theft plans, IDShield. LegalShield plans provide protection to more than 4.2 million individuals, and IDShield provides identity monitoring and restoration services to more than one million individuals across North America. In addition, LegalShield and IDShieldserve more than 141,000 businesses.
For as little as $20 per month, LegalShield members get access to attorneys with an average of 19 years of experience in areas such as family matters, estate planning, financial and business issues, consumer protection, tax, real estate, benefits disputes and auto/driving issues. Unlike other legal plans or do-it-yourself websites, LegalShield has dedicated law firms in 50 states and four provinces in Canada that members can call for help without having to worry about high hourly rates. For more information, visit http://www.LegalShield.com or http://www.IDShield.com
# # #
About Us• #1PROVIDERofsubscription-basedlegalplansto
households
• 45+YEARhistory
• 6,900BROKERANDAGENCYclientsservedbyourdedicatedB2Bdivision.
• 1.6MMEMBERSHIPS(4.1Mlives)payingmonthlyviacreditcard/debitcard/payrolldeduction
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• 39PROVIDERFIRMSin50statesand4Canadianprovinceswithatotalof900lawyersfocusedonLegalShieldmatters,inadditiontoareferralnetworkof4,600lawyers,with19yearsaverageexperience
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About the LegalShield Law Index• TheLegalShieldLawIndexisasuiteofleadingindicatorsoftheeconomicandfinancialstatusofU.S.
householdsandsmallbusinesses.• TheLegalShieldLawIndexiscomprisedoffivesub-indicesthatareconstructedfromLegalShield’s
proprietarydata,whichreflectthedemandforvariouslegalservicesoverthepast15+years.EachtimeaLegalShieldproviderlawfirmreceivesarequestfromaLegalShieldcustomer,therequestisloggedasan“intake”inoneofroughly70uniqueareasoflaw(e.g.,realestate)dependingonthenatureoftherequest.
• Eachsub-indexreflectsthenumberofintakesinanareaoflawasashareoftotalintakesacrossallareasoflawinagivenmonth.Insomeinstances,individualindicesacrossmultipleareasoflaw(e.g.,bankruptcy,foreclosure,estateplanning)arecombinedtoproduceacompositeindex(e.g.,consumerfinancialstress).
• Thesub-indicesthatcomprisetheLegalShieldLawIndexwereselectedbecausetheytendtoleadanexistingeconomicindicatorthatshedslightonthehealthoftheU.S.economy(i.e.,thetargeteconomicindicator).Inthisway,theLegalShieldLawIndexprovidesactionableintelligenceaboutthedirectionoftheU.S.economyinthenearterm.
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Advantages of the LegalShield Law IndexUNIQUETheLegalShieldLawIndexisbasedoninquiriesintospecificlegalserviceseachmonth.Tothebestofourknowledge,thereisnocomparabledataonthemarket.
PROPRIETARYTheLegalShieldLawIndexisbasedondatacollectedthroughLegalShield’s providerlawfirmsinall50states,therebyofferinginformationthatisnotaccessibletothegeneralpublic.
HIGH-FREQUENCYTheLegalShieldLawIndexisbasedondatacollectedonanearreal-timebasis,andcanberefreshedonaweeklyormonthlybasisdependingontheuser’sneeds.
ROBUSTTheLegalShieldLawIndexisbasedonintakesformorethan1.6millionmemberships(includingindividualsandsmallbusinesses),providingawindowintotheexperiencesoffamiliesandbusinessesacrossthecountryatanygivenpointintime.
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LegalShield Law Index + Target Economic Indicators
Eachsub-indexthatcomprisestheLegalShieldLawIndexhasundergoneabatteryofstatisticalteststovalidateitsrelationshiptoanexistingeconomicindicatorthatshedslightonthehealthanddirectionoftheU.S.economy(i.e.,thetargeteconomicindicator).Eachindexwasselectedbecauseittracksitstargetindicator,therebyprovidingadvanceinsightintowheretheeconomyisheadinginthenearterm.
LegalShield Law Index LegalShield Area(s) of Law Target Economic IndicatorConsumer Financial Stress(Composite Index)
Bankruptcy, Foreclosure, & Estate Planning
Consumer Confidence (Conference Board)
Housing Activity(Composite Index) Foreclosure & Real Estate Housing Starts
(U.S. Census Bureau)
Bankruptcy Bankruptcy Total Bankruptcies(Compiled by Epiq Systems)
Foreclosure Foreclosure Foreclosure Starts(Mortgage Bankers Association)
Real Estate Real Estate Existing Home Sales(National Association of Realtors)
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Interpreting Each Component of the LegalShield Law Index
CONSUMERFINANCIALSTRESSINDEXConsumerspendingaccountsformorethantwo-thirdsofU.S.economicactivity.TheflagshipLegalShieldConsumerFinancialStressIndextendstoleadtheConferenceBoard’sConsumerConfidenceIndexbyonetothreemonths.TheLegalShieldConsumerFinancialStressIndexalsoprovidesauseful“hard”datacheckontheConsumerConfidenceIndexandsimilarmeasuresofconsumerconfidencethatarebasedon“soft”surveydata,asthesemeasuresarenotalwaysconsistentwithunderlyingeconomicconditions.
HOUSINGACTIVITYINDEXThehousingmarket,broadlydefined,accountsforuptoone-seventhofU.S.economicactivity,andtheamountofnewresidentialconstruction(asmeasuredbyhousingstarts)canprovideinsightsintoconsumers’confidenceabouttheirjobsandfutureincome.TheLegalShieldHousingActivityIndextendstoleadU.S.Censusdataonhousingstarts(akeyeconomicindicator)by1–2months— providingtimelyintelligenceaboutnear-termhousingmarkethealth.
BANKRUPTCYINDEXBankruptcydataprovideanimportantinsightintotheoverallfinancialhealthofconsumersandbusinesses.AswitnessedduringtheGreatRecessionod2008-09,anuptickinbankruptciescan
foreshadowsignificantturmoilwithintheeconomy.TheLegalShieldBankruptcyIndextendstoleadthetrajectoryoftotalbankruptciesbyroughlyonemonth,providinganearlywarningsignalofaneconomicdownturn.
FORECLOSUREINDEXAriseinforeclosuresoftensignalsaworseningofhouseholdfinances,ashouseholdstypicallydelaypaymentsonotherdebtobligationsinordertopaytheirmortgagesontime.TheLegalShieldForeclosuresIndexcloselytracksforeclosuresasreportedeachquarterbytheMortgageBankersAssociation,butbecauseitispublishedonamore-frequentmonthlybasis,theLegalShieldForeclosureIndexprovidesanadvancemeasureofforeclosureactivityandrelatedfinancialstress.
REALESTATEINDEXThehousingmarketaccountsforasignificantshareofU.S.economicactivity,andthepaceofexistinghomesalescanprovideinsightsintoconsumers’confidenceabouttheirjobsandfutureincome.TheLegalShieldRealEstateIndextendstoleadexistinghomesalesaspublishedbytheNationalAssociationofRealtorsandoffersanearlylookatemergingtrendsinthehousingmarket.
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0
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140
1600
25
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100
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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
LegalShield Consumer Financial Stress Index
2016.06 2016.12 2017.06
80
90
100
110
120
13065
75
85
95
105
115
Historical Trend Over Past 15 Years
Consumer Financial Stress Index(Left Axis; Jan. 2002 =100)
Consumer Confidence, Inverted(Right Axis; 1985 = 100)
Movement Over Past 12 Months
TrendsinContext: TheLegalShieldConsumerFinancialStressIndexheldsteadyat87.4inJune,indicatingthelowestlevelofconsumerfinancialstressinoveradecade.TheIndexcontinuestoshowthatconsumers’financesaregenerallyhealthy andareconsistentwithlastmonth’sstrongemploymentreport.However,thereremainsanunusualdivergencebetweenLegalShielddataandtheConferenceBoard’sConsumerConfidenceIndex,whichtickedupthismonth,defyingmarketexpectations.Whenthesegapshaveemergedinthepast,itistypicallyConsumerConfidencethatcomesbackintolinewiththeConsumerStressIndex,andthissuggeststhatConsumerConfidenceislikelytosoften.Ifthatoccurs,measuresofconsumeractivity(e.g.,retailsales)couldweakeninthelatterpartoftheyear.
TheBottomLine:TheLegalShieldConsumerFinancialStressIndex,aleadingindicatoroftheConsumerConfidenceIndex,suggeststhatconsumer confidenceshouldeaseinthenext1-3months,butwilllikelyremainstrongbyhistoricalstandardsgiventhatconsumerfinancialstressremainsmutedrelativetoitslong-termaverage.
Source: LegalShield; The Conference Board.
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0
250
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1,750
2,000
2,250
2,500
60
70
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100
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120
130
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Thou
sand
s
2016.06 2016.12 2017.061,000
1,200
1,400
1,600
1,800
85
95
105
115
HistoricalTrendOverPast15Years MovementOverPast12Months
Source: LegalShield; Census Bureau; Census Bureau (X-13ARIMA-SEATS Seasonal Adjustment Program).
Housing Starts(Right Axis; Thousands)
Housing Activity (Left Axis; Jan. 2002 =100)
LegalShield Housing Activity IndexTrendsinContext:TheLegalShieldHousingActivityIndexinchedup0.3pointto111.4inJuneduetomodestimprovementsinboththeforeclosureandrealestatecomponents,andisup6.4%overthelast12months.TheLegalShieldHousingActivityIndex,whichhasastrongrecordofcloselytrackingU.S.housingstartsoverthelast15years, continuestosuggestthehousingmarketshouldbestrongerthanitcurrentlyis.Onnet,U.S.consumersareemployed(asunderscoredbythestrongJuneemploymentreport)withsolidcredit,manageabledebtlevels,andheightenedconfidenceabouttheeconomy.Thesefactors,combinedwithhistoricallylowhomeinventories,pointtoarevivalinhousingactivity.However,regionalconstructionlaborshortages,risinginputprices,andtightermortgagelendingpracticescontinuetoactasheadwindstoahousingmarketrevival.Ifthehousingsupplyfinallypicksuptomeetcurrentdemand,constructioninvestmentmayincreaseinthesecondhalfoftheyear, whichcouldinturnboostoveralleconomicgrowth.
TheBottomLine:TheLegalShieldHousingActivityIndex,aleadingindicatorofhousingstarts,suggeststhathousing construction— whichhasrisenatastubbornlyslowpacesince2012andremainswellbelowpre-recessionlevels— maypickupinthemonthsahead.
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100
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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2016.06 2016.12 2017.06140
160
180
200
220
240
260
40
45
50
55
60
65
70
HistoricalTrendOverPast15Years MovementOverPast12Months
Source: LegalShield; Epiq Systems. Note: Latest data point reflects the estimated bankruptcy count for the current quarter based on the latest available data for current quarter.
Total U.S. Bankruptcies(Right Axis; Thousands)
Bankruptcy Index(Left Axis; Jan. 2002 =100)
TrendsinContext:TheLegalShieldBankruptcyIndexfell2.2pointsto44.6inJuneandisdown10.2%sofarin2017.Healthylabormarketsandall-timehighsinpersonalnetworthsuggest thatbankruptcyfilingsshouldremainnearhistoriclowsinthemonthsahead,andtheLegalShieldBankruptcyIndexcontinuestosupport thisoutlook.However,therearesomepotentiallytroublingsignsonthehorizon, suchasthe$1.4trillioninoutstandingstudentdebt andrisingdelinquenciesinsubprimeautoloans.Ifthesetrendsworsen,orifotherdriversofhouseholddebt(e.g.,creditcardspending)begintodeteriorate,U.S.bankruptciescouldaccelerateinthenext1-2years,whichcouldleadtoconsumerstighteningtheirbeltsandpullingbackonspending.Nonetheless,overthenext1-2months,theLegalShieldBankruptcyIndexsuggeststhereislittlecauseforconcern.
TheBottomLine:TheLegalShieldBankruptcyIndex,aleadingindicatorofmonthlybankruptcyfilings,suggeststhatbankruptciesarelikelyto remainmutedinthenearterm.However,bankruptcies maywellincreaseinthemediumterm,particularlyifcertainmeasuresoffinancialstress(e.g.,studentloandebt,autoloandebt,orcreditcarddebt) begintoclimb.
LegalShield Bankruptcy Index
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0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
0
50
100
150
200
250
300
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2016.06 2016.12 2017.060.2%
0.4%
0.6%
0.8%
40
60
80
100
HistoricalTrendOverPast15Years MovementOverPast12Months
Source: LegalShield; Mortgage Bankers Association.
Foreclosure Starts(Right Axis; Percent of Mortgages)
Foreclosure Index(Left Axis; Jan. 2002 =100)
TrendsinContext:TheLegalShieldForeclosureIndexedgedup0.9 pointto62.7inJune,butremainsnearly20%belowyear-agolevels.ThedeclineintheIndexsincetheendoftherecessionhas trackedcloselywithfallingforeclosurestartsasmeasuredquarterlybytheMortgageBankersAssociation,andLegalShielddataindicatethetrendofhistoricallylowforeclosurestartsshouldcontinueintheshortterm.Althoughthehousingmarkethasnotyetfullyrecoveredfromthe2008-09recession,foreclosureshavesteadilydecreasedsince2010andarecurrentlyatmulti-decadelows. However,rising interestratesarelikelytoputupwardpressureonforeclosureactivityasitbecomesmoredifficulttoservicedebt,andeventuallyforeclosureswillbegintoriseagain.The LegalShieldForeclosureIndexshouldprovideanearlywarningsignaltothemarketofanimpendingriseinforeclosureactivity,andwhenthisoccurs,itcouldsignalthebeginningoftheendofthecurrentbusinesscycle.
TheBottomLine:TheLegalShieldForeclosureIndex,anadvancemeasureofforeclosureactivity,suggeststhatforeclosuresshouldremainsubduedintheshortterm,butmaybegintoriseinthesecondhalfoftheyear.
LegalShield Foreclosure Index
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3,000
4,000
5,000
6,000
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8,000
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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Thou
sand
s
2016.06 2016.12 2017.064,800
5,000
5,200
5,400
5,600
5,800
6,000
94
98
102
106
110
Thou
sand
s
HistoricalTrendOverPast15Years MovementOverPast12Months
Source: LegalShield; National Association of Realtors; Census Bureau (X-13ARIMA-SEATS Seasonal Adjustment Program).
Existing Home Sales(Right Axis; Thousands)
Real Estate Index(Left Axis; Jan. 2002 =100)
TrendsinContext:TheLegalShieldRealEstateIndexinchedup0.7 pointto101.3 inJune.Theindexhasincreasedmodestly(2.2%)overthelast12months andhascloselymirroredmovementinexistinghomesales,whicharelikelytocontinuetoriseslowlydespitesluggishconstructionactivity.Thedivergencebetween“softdata”and“harddata,”acontinuingthemein2017asevidencedbyheightenedbusinessandconsumerconfidence,isalsoapparentinthehousingmarket.Specifically,surveysindicatethattheshareofhomeownerswhobelievethatnowisagoodtimetoselltheirhomehasoutpacedharddataonexistinghomesales.Homesalesaresluggishinpartbecausethehousingmarketcontinuestoenduresupplyshortagesinmanyregions,asevidencedbyrisingpricesandanewrecord-lowformediandaysonmarketinMay. However,ifhousingstartsincreaseinthesecondhalfoftheyearassuggestedbytheLegalShieldHousingActivityIndex,constructionactivitymaywellincrease,whichcouldinturnboosthomesalesandtheoveralleconomy.
TheBottomLine:TheLegalShieldRealEstateIndex,aleadingindicatorofexistinghomesales,suggeststhathomesalesshouldcontinueto slowlyimproveinthemonthsahead.However,astrongsalesresurgenceisunlikelytooccurinthenearterm.
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LegalShield Real Estate Index
