Americans experienced a record level of personal financial satisfaction in the third quarter, the American Society of CPAs reported Thursday.
Stock market gains and abundant job availability propelled the AICPA’s third-quarter Personal Financial Satisfaction Index past its previous high reached in the 2006 fourth quarter, just before the recession.
The AICPA began issuing the PFSi quarterly in January 2015, with the data for the index tracking back to 1994.
The PFSi is calculated as the Personal Financial Pleasure Index minus the Personal Financial Pain Index, with positive readings indicating that Americans are feeling more financial pleasure than pain.
The third quarter PFSi measured 25.9, up 2.6 points from the previous quarter. The increase was due to a 2.1-point gain in the pleasure index and a 0.5-point loss in the pain index.
“By and large the pleasure index factors have been trending up for some time as we have mostly recovered from the great recession,” Mark Astrinos, member of the AICPA PFS credential committee, said in a statement.
“While we all benefit from the surge of capital markets and real estate growth, it’s prudent that our financial health safeguards remain in place. This means ensuring that you rebalance portfolios to reduce risk and maintaining adequate cash reserves for when economic times are more challenging.”
A big majority of retail investors in a survey released this week expressed confidence in U.S. capital markets.
The pleasure index, made up of four equally weighted factors, each of which measures the growth of assets and opportunities, set a third consecutive quarterly record, at 68.1, up 2.1 points from the second quarter.
The Real Home Equity Per Capita Index, based on data issued for April, experienced the largest increase over the previous quarter, up 4.8 points to 65, though it is still 16.3% below its 2006 all-time high.
According to the AICPA, the changes in home equity have been due to increases in the market value of real estate exceeding increases in mortgages outstanding.
The PFS 750 Market Index, up two points from the second quarter to 84, remained the biggest contributor to the pleasure index, a trend dating to 2009. The U.S. economy has continued to expand as corporate earnings improve and interest rate policy remains accommodating.
The strongest sectors have performed well this year. The banking sector led returns, gaining 44%, and the aerospace and defense sector gained 42% — not surprising, the AICPA noted, given tensions over North Korea.
The Job Openings Per Capita Index, up 3.6% at 70, was the second largest contributor to the pleasure index in the third quarter. At a total of 6.2 million, overall job openings are setting records, the AICPA noted, with strongest job growth in food services, professional and business services, and health care.