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Recent studies suggest that the economy may have bottomed out and that consumer confidence is on the rise. These indicators bode well for collection agencies as it could translate to better liquidation rates. Approximately 23% of Americans polled in March by Gallup's Consumer Mood Index say they believe economic conditions are improving, up 16% from a month earlier (CardLine, 4/13). Michael Flock, managing director at Atlanta-based M&A firm Flock Advisors, agrees consumer confidence is improving, based on the recovery and liquidation rates that his company's debt buyer and collection agency customers are reporting. Of the companies Flock Advisors works with, "collections for the last few months, including early April, have flattened out," Flock tells CardLine sister publication Collections & Credit Risk. "We believe the flattening of liquidations is due to consumers paying off credit card debt first to maintain a line of credit at a time when they may be missing mortgage payments or losing their homes to foreclosure," he says. The seasonally adjusted Credit Manager's Index, which gauges economic factors affecting credit and collection professionals, rose slightly to 43 in March from 42.5 during the previous month and 40 in January (CardLine, 4/3). Index increases the last two months broke a string of consecutive declines that began in August 2008, according to a report by the National Association of Credit Management. The index consists of favorable factors, such as the amount of credit extended, and unfavorable factors, such as accounts placed for collection and bankruptcy filings.
