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.
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.