Consumer Financial Stress Index
Dun & Bradstreet have developed a Consumer Financial Stress Index (CFSI). It is an index which provides a balanced assessment of the financial health of consumers and because of that, will be an important tool for assessing the macroeconomic risks and potentially, the policy considerations of the RBA.
For example, if consumer stress rises, it will signal downside risks to the economy in the period ahead. Lower interest rates may moderate that stress.
It is early days for the CFSI, but I look forward to continue my work with D&B on the index and trust it will soon be acknowledged as an important economic indicator for the economy.
In terms of more details, this is how D&B describe the CFSI.
“The current and projected CSFI scores are calculated each month from a series of correlated data variables which are derived from information held on D&B’s database of millions of Australian consumers and companies. These variables are representative of consumer and business themes covering ‘confidence’, ‘desperation’, ‘awareness’, ‘cash flow’ and ‘business risk’.
Weighted and combined, these variables provide two scores predictive of consumers’ demand and capacity for credit. Together, these scores create a final index of consumer financial stress that is closely aligned with consumers’ ability to meet future credit obligations, and indicative of future business and economic conditions.”
For more details, click on the link.