The American Society of CPAs reported Thursday that its index of Americans’ personal financial satisfaction reached its highest level since the measure was introduced 24 years ago.
Stock market gains and a decline in underemployment overcame rising inflation to push the PFSi to 26.9, up 1.2 points from the record-setting third quarter, according to the report. The index has now advanced for seven consecutive quarters.
The PFSi is calculated as the Personal Financial Pleasure Index minus the Personal Financial Pain Index, with readings above zero indicating that Americans are feeling more financial pleasure than pain.
The fourth quarter increase was due to a 1.3-point gain in the pleasure index that outweighed a 0.1-point increase in the pain index.
What Your Peers Are Reading
“Americans should continue to reassess their personal risk tolerance, and work with their financial advisors to determine how best to approach investment decisions in 2018,” David Cherill, a member of the AICPA personal financial planning executive committee, said in a statement.
A recent study showed that U.S. consumers who work with a financial advisor are more confident in their financial future as a result of the relationship.
“Many of my clients have more confidence than ever in the market, while others are scared to death and have already taken considerable gains off the table,” Cherill said. “The potential for volatility remains, but this market has thus far been immune to many of the factors that have resulted in large swings in the past.”
Goldman Sachs’ chief U.S. equity strategist recently predicted that the bull market would run another three years.
Pleasure Index Record
The pleasure index, which comprises four equally weighted factors, each of which measures the growth of assets and opportunities, rose 1.3 points to 69.2 in the fourth quarter, a new record.
The component PFS 750 Market Index, at 88, continued to be the biggest contributor to the pleasure index, a trend that began in 2009, according to the report. The index consists of the 750 largest companies by market capitalization trading on the U.S. market. It rose 5.2% over the third quarter, and was 15.7% ahead of the 2016 fourth quarter.
The strongest market performers in the October-to-December quarter were the consumer discretionary sector, which gained just over 11%, followed closely by technology, which advanced almost 10%.