Americans are experiencing their highest levels of personal financial satisfaction in more than 10 years, according to the American Institute of CPAs.
The AICPA, which released its Q2 2017 Personal Financial Satisfaction Index on Thursday, said stock market gains, more job openings and a decrease in inflation from the first quarter drove personal financial satisfaction to a high not seen since the fourth quarter of 2006.
The PFSi is calculated as the difference between two component sub-indexes: the Personal Financial Pleasure Index minus the Personal Financial Pain Index. Positive readings indicate that Americans are feeling more financial pleasure than pain.
The second quarter PFSi increased by 7.6 points from the first quarter to 24.1, owing to a 1.4 point uptick in the personal financial pleasure index and a substantial 6.2 point decrease in the personal financial pain index.
“In conversations with our clients, we’ve been telling them to be aware of the long-term trend,” David Stolz, member of the AICPA PFS credential committee, said in a statement. “People naturally overweigh the current situation and forget that it is part of a cycle.
“Americans shouldn’t let their present situation allow them to drift from their plan of reducing debt and adding to their savings. It’s always wise to save some acorns in the summer, because we know eventually winter is coming.”
It’s a Pleasure
The pleasure index set a record for the third consecutive quarter, clocking in at 66, up 1.4 points from the first quarter and 5.6 points from a year ago.
The pleasure index comprises four equally weighted factors that measure the growth of assets and opportunities. The PFS 750 Market Index has been the biggest contributor to the pleasure index for several years. It set a record in the first quarter at 79, 3.2 points over the previous high, and held steady in the second quarter.
Information technology experienced the strongest gains followed by consumer discretionary and health care over the previous quarter, whereas energy and telecom experienced losses.
The Job Openings per Capita Index recorded 69, a 5.3 point increase over the first quarter, and moved into position as the second most important contributor to the pleasure index.
Job openings were highest among lower-paying sectors such as leisure/hospitality and accommodation/food services, both of which had all-time high vacancies. In addition, government job openings stood at their second-highest level ever, in part because the federal hiring freeze was lifted in April, resulting in many open positions.
At the same time, hiring was notably weak in the IT, trade, transportation and financial activities sectors. The AICPA said employers were having a harder time finding skilled workers to hire as the labor market continued to tighten, citing the Federal Reserve’s Beige Book April 2017 Report.