Americans’ financial satisfaction in the second quarter climbed to its highest level since the third quarter of 2007, notwithstanding political uncertainty at home and abroad, the American Institute of Certified Public Accountants reported Thursday in releasing its second quarter Personal Financial Satisfaction Index.

The index stands at 17.1, a 3.4-point increase from the first quarter and a 1.2-point increase from a year ago.

The PFSi weighs a variety of economic factors to determine the financial standing of what the AICPA calls a “typical American,” using both proprietary and normalized official U.S. government data. It is calculated as the Personal Financial Pleasure Index minus the Personal Financial Pain Index — two component sub-indexes.

These comprise four equally weighted factors that measure the growth of assets and opportunities, in the case of the pleasure index, and the erosion of assets and opportunities, in the case of the pain index.

Pleasure factors include the proprietary PFS 750 Market Index, comprising the 750 largest companies by market capitalization trading on the U.S. markets, excluding ADRs, mutual funds and ETFs. The other components are the AICPA’s CPA Outlook Index, real home equity per capita and job openings per capita.

The pain factors are inflation, personal taxes, loan delinquencies and underemployment.

Pleasure Index

At 61.6, the Pleasure index is 2.1 points higher than in the first quarter, and 0.1 points down from a year ago.

The AICPA said the quarter-on-quarter gain was due to a five-point increase in its CPA Outlook Index, which captures executives’ expectations for business expansion, revenues, profits and spending, among other factors.

Improvements in both home equity and job openings also contributed to the increase.

The AICPA reported that home equity has grown because of increases in the market value of real estate, helped by tight supply in many markets and low mortgage interest rates.

Real estate values vary greatly from state to state. Those with the highest year-over-year home price increases, ranging from about 7.6% to more than 10%, are Colorado, Oregon, Nevada, Utah and Washington, while those with prices farthest from peak values, ranging from 23% to 33%, are Arizona, Florida, Maryland, Nevada and Rhode Island.

Nationally, home prices remain about 8% below their all-time high.

With home prices off their peak value in some regions and nationally, potential exists for continued price improvement and therefore a further increase in personal financial satisfaction, the AICPA said.

“The increase in home equity has many baby boomers finally thinking about downsizing to capitalize on that equity, and there is an eager market of older millennials who are finally ready to make their first home purchase,” said Kelley Long, a member of the AICPA’s National CPA Financial Literacy Commission.

“Low mortgage rates combined with great job opportunities are giving people confidence to make some moves that maybe they’ve been putting off and this is a great sign for continued economic prosperity.”

The AICPA said its CPA Outlook Index was four points lower than a year ago, with the largest decline in components that measure U.S. economy optimism, profits and organization optimism.

Pain Index

The Pain index stands at 44.5, 1.3 points lower than in the second quarter and 1.2 points lower than a year ago.

The AICPA said this quarter’s level reversed most of last quarter’s increase, the first uptick in the pain index since the first quarter of 2013. The decrease in the index’s overall value from the first quarter was due to a four-point decline in loan delinquencies and a one-point decline in inflation, with taxes and underemployment flat.

Britain’s vote to exit the E.U. may not have significantly influenced the current index numbers because it occurred late in the quarter, the report said.

Going forward, however, U.S. individuals and corporations may feel some pain, it said. The Federal Reserve cited Brexit as a reason not to raise interest rates, and indicated that future rate hikes may be slower than previously planned.

Another challenge may come if the British pound’s weakness affects the euro, as the cost of American goods and services would increase and soften demand.

“The U.K.’s decision to leave the European Union on June 23 was shocking and the Dow plummeted 900 points during the first two trading days after the vote,” Michael Eisenberg, a member of the AICPA’s National CPA Financial Literacy Commission, said in the statement.

“By the end of that next week, all the losses were recouped, as the shock wore off. However, for the long term there might be more of a financial impact as many big financial companies may cut their hiring plans.”

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