Consumer distress looks to be on the decline, according to a recent report by counseling agency CredAbility. CredAbility’s consumer distress index showed its highest score in two and a half years in the first quarter of 2011, the report showed.

For the quarter ending March 31, the 100-point index indicated a score of 68.5, just slightly below the 70-point threshold under which consumer distress is determined.

“The good news is that the full-time labor force grew by more than 540,000 people in the first quarter and consumers with stable incomes have a handle on their credit and household budgets,” said Mark Cole, chief operating officer for CredAbility, and author of the CredAbility Consumer Distress Index. “While the housing category continues to deteriorate, a gain of four points in the index during the past five quarters indicates that the majority of consumers are on the right track.”

Source: CredAbility

While the score for the credit category posted its highest since 2007’s second quarter, reaching a level of 82, the housing category was the only one of five categories to see a decline. During the quarter, the housing consumer distress index fell from 62.8 to 61.6, according to the report. Contributing to the decline were vacancy rates for rental housing, which continued to increase in major states.

Regionally, North Dakota and South Dakota have the highest scores among individual states; California raised its score for the sixth consecutive quarter; and six Southeastern states rank among the 10 most distressed states.

View the full report.

Written by Elizabeth Ecker