2020 has been an “economic seesaw,” putting Americans’ personal financial satisfaction through the largest swing in the last quarter-century.
Thankfully, a quarterly economic gauge that measures the personal financial standing of a typical American finds a massive improvement in financial satisfaction.
The AICPA’s Q3 2020 Personal Financial Satisfaction Index (PFSi) measured 33.1, a 99% increase from the previous quarter.
This is the largest quarterly increase in the 27-year history of the Index and a complete reversal from Q2 which saw the Index experience its largest-ever quarterly drop.
Sharp reversal in underemployment drives overall satisfaction
Two labor market-related factors, job openings per capita and underemployment, had the biggest impact on improving the overall PFSi.
The primary factor driving the quarter-over-quarter rally was a 35% (37 points) decrease in underemployment. A decline in underemployment improves overall financial satisfaction. Though underemployment saw an improvement from the previous quarter’s painful record high, it remains 117% above its year-ago level. For the second quarter in a row, underemployment remains the largest negative contributor to the average American’s personal financial satisfaction.
The COVID-19 pandemic strained the U.S. economy and put millions out of work, causing Job openings per capita to experience a record plummet earlier this year.
In Q3, job openings began to claw back, increasing 37% (20 points) above the previous quarter. The factor is now only 10% below its year-ago reading pre-pandemic.
Market index reaches all-time high
In Q3, the PFS 750 Market index, an AICPA proprietary stock index comprised of the 750 largest companies trading on the U.S. Market, reached a new all-time high.
The new high eclipsed the previous record set in Q4 2019 by 6%. For the seventh quarter in a row, the Market Index is the biggest positive contributor to the Index. The Q3 value is determined by the stock market’s closing position at the end of the first trading day of Q4, which for this reading was October 1.