Kaulkin Ginsberg Index

The Kaulkin Ginsberg Index (KGI) is a composite of seven macroeconomic factors that directly impact the accounts receivable management (ARM) industry. The Index provides an overview of the economic environment in which ARM companies do business without addressing the financial or operational results of companies in the industry.

Recoveries More Challenging for Collection Agencies as KGI Falls Again

KGI June 2008

May 28, 2008: ROCKVILLE, MD - The Kaulkin Ginsberg Index (KGI), the leading indicator of economic conditions affecting the accounts receivable management (ARM) and debt management industries, continued its downward slide in the first quarter of 2008 to 1240.4. The index is down 1% during the quarter, 8% year over year, and 16% from its high of 1477.7 in October 2006.

“What we're seeing here reflects what we've heard in many places,” said Paul Legrady, a Director of Kaulkin Ginsberg. “The credit crunch is affecting recovery rates, and collections have become more challenging.”

The collection of charged-off receivables is especially influenced by the unemployment rate, which has increased from 4.5% to 5.1% since October 2006. If a recession continues into 2009, as many economists project, and unemployment rates increase back to historical averages, then the KGI will fall more dramatically and recovery efforts by collection agencies in the U.S. will become increasingly challenging as a result.

In the first quarter of 2008, the Index was weighted down by four of its seven contributing economic variables:

Variable	Mar. 2008*	Q1 Change*	Effect on KGI*
Unemployment rate	5.1%	-3.3%	Down
Federal Funds Rate	2.61%	-33.8%	Down
Charge-off rate	0.97%	34.7%	Up
Outstanding Consumer Credit	$2.56T	1.5%	Up
Total Market Cap of ARM Stocks	$1.44B	-13.8%	Down
Bankruptcy Filings	226,413	-1.8%	Down
Consumer Price Index	213.5	1.1%	Up

* See “How is the KGI Calculated.”

For more information about the Kaulkin Ginsberg Index, call Paul Legrady at 240-499-3818.