NEW YORK ( TheStreet) -- Washington pols are squabbling over the right formula to avoid the dreaded "fiscal cliff" coming Jan. 1, when a combination of tax cuts and spending cuts come together and threaten the heath of the U.S. economy. U.S. consumers, while grappling with their own troubles, may well be doing a better job than the nation's political "elites." The nonprofit consumer credit counseling agency CredAbility offers that opinion in its most recent quarterly Consumer Distress Index, released Thursday. According to spokesman Matt Di Taranto, U.S. consumers are slowly but surely winding their way back to some level of fiscal stability after four years of financial pain. "The number of bankruptcies filed nationwide dropped by 8% and delinquency rates continued to fall on credit cards, giving consumers greater spending flexibility for the upcoming holiday season," Di Taranto says. "For the first time since early 2008, the average U.S. household remained out of financial distress for two consecutive quarters." The CredAbility index is based on a 100-point formula, with higher scores meaning a better consumer financial situation. In it, the group accounts for five key consumer areas: employment, housing credit, household budget and net worth. In the third quarter of 202, U.S households clocked in at 70.5, down slightly from 71.3 in the second quarter. But overall, Di Taranto points out the third-quarter 2012 score is four points ahead of the period in 2011. That said, current index figures suggests Americans are too close to that fiscal cliff -- any score below 70 in the CredAbility index, and the U.S. consumer economy is officially in "financial distress". The index also tracks financial distress on a city-by-city basis. By that measure, Orlando and Tampa, Fla., and Las Vegas are in perilous territory, with index readings for each below 61, CredAbility reports. Cities that showed progress in Q2, including Chicago, Detroit, Philadelphia and Pittsburgh, all lost traction in Q3. Washington, D.C., Boston and Minneapolis-St. Paul registered the largest gains for the quarter, the group adds. While the index does show that Americans are too close to that "financial distress" level, CredAbility says that forward progress is well in motion -- and that's a good sign for the U.S. economy. "While our national leaders are negotiating to improve our country's financial condition, most households have already made the tough spending choices in recent quarters to avoid their own 'fiscal cliff,'" says Mark Cole, executive vice president at CredAbility. "For the first time in four years, the average U.S. household is able to spend during the holiday season without taking on new debt or creating a major financial problem."