Trump bump? More awareness of the need for diligent saving and retirement security? Who cares?
Workers are experiencing their highest levels of personal financial satisfaction since the fourth quarter of 2006, according to the American Institute of CPAs.
But the organization reminds us it’s all part of the business cycle.
“In conversations with our clients, we’ve been telling them to be aware of the long-term trend,” AICPA David Stolz said in a statement. “People naturally overweight the current situation and forget that it is part of a cycle.”
“It’s always wise to save some acorns in the summer, because we know eventually winter is coming,” he added in an apparent nod to Game of Thrones.
Personal satisfaction, as defined by the AICPA, is measured by something apparently only accountants can understand—the organization’s Personal Financial Satisfaction Index (PFSi).
Here’s what we mean:
The PFSi is calculated as the Personal Financial Pleasure Index minus the Personal Financial Pain Index, with positive readings indicating (somewhat obviously) that Americans are feeling more financial pleasure than pain.
The second-quarter PFSi measured 24.1, a 7.6 point increase from the prior quarter. The increase was due to the slight uptick in the Personal Financial Pleasure index (1.4 points) and a substantial 6.2 point decrease in the Personal Financial Pain index.
The Personal Financial Pleasure Index, at 66, is up 1.4 points from the previous quarter and has continued its steady increase, setting a record for the third quarter in a row.
The Personal Financial Pain Index, at 41.8, saw all four factors decrease from the previous quarter combining to drop the index 6.2 points which contributed to the overall improvement in the PFSi.
The decrease from the preceding quarter was driven largely by a 16.5 point drop in the inflation index, the most volatile factor in the PFSi.
“The U.S. economy has continued to show signs of strength as it leaves the great recession behind,” AIPCA said. “The Q2 inflation index, which preceded the Federal Reserve’s June announcement that the target interest rate will rise, has been held down in recent months by a price war in the wireless cell phone industry and falling prescription drug prices.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
