Financial stress healthy but housing market has stalled

The confidence of American consumers in their financial health reflects the strength of the economy with rising incomes, manageable debt, and a very tight labor market.

However, there signs that mortgage lenders are tightening credit and that the housing market is losing steam.

The LegalShield Law Index is based on demand for legal services and reveals that the financial stress component remains historically low despite a 1 point rise in the third quarter of 2018.

"Without question, consumers are feeling good about the economy and their finances right now," explained Dave Coffey, LegalShield's Senior Vice President and Chief Digital Officer. "For the last two years, the LegalShield Law Index has pointed toward this robust economy, and we continue to have a bullish outlook for consumers. Low consumer financial stress should translate into solid retail spending, and we suspect that will drive hiring rates and wages higher to keep up with demand."

The bankruptcy component continues to suggest that bankruptcies will remain subdued in the near term.

Housing market

But LegalShield is less optimistic about the housing market.

Its Real Estate Index suggests existing home sales are unlikely to improve in the short term due to severe inventory shortages and rising prices, while its Housing Activity Index suggests that housing construction momentum has stalled in 2018.

"Although the housing market varies from region to region, overall we're not seeing a big rebound occurring any time soon," said Coffey. "The Federal Reserve is on track to raise rates for the fourth time this year in December, which will put even more upward pressure on mortgage rates and make home buying even less affordable. Normally we'd expect to see home builders respond by ramping up construction, but it just hasn't materialized."