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The average American should be feeling a strong sense of financial well-being, according to the American Institute of CPAs.

True, the AICPA’s third-quarter personal financial satisfaction index came in at 37.3, down 1.4 percentage points from the previous quarter. But the index remains firmly in positive territory and close to its recent record high of 38.7 (revised), the association said in a statement released Thursday.

The third-quarter decline was due to a 1.7-point drop in the Personal Financial Pleasure Index that outweighed a 0.3-point decrease in the Personal Financial Pain Index. This is the third time in the past year that the index has decreased, the AICPA noted.

The PFSi is calculated as the Pleasure Index minus the Pain Index, with positive readings signaling that Americans are feeling more financial pleasure than pain.

Pleasure Index

The Pleasure Index, at 72.6, was down 1.7 points from the previous quarter and down 2.3 points year over year. Even so, the index, which is made up of four equally weighted components, remained relatively close to its all-time high of 75.0 set the 2018 third quarter.

The quarterly decline was led by a drop of 2.8 points in the CPA Outlook Index, a broad-based composite that captures the expectations of business executives in the year ahead for their companies and the U.S. economy.

The current reading of 48, based on a survey conducted at midsummer, was 11.9% lower than the prior year and down 5.5% from the previous quarter.

The decrease from the previous quarter was primarily driven by a 15-point decline in optimism about the U.S. economy’s outlook over the next 12 months. The AICPA noted that although Americans are experiencing near record-high levels of financial satisfaction, CPA executives have become somewhat more worried about the potential for an economic downturn in the year ahead.

“It’s important for Americans to keep in mind that economies are cyclical,” David Desmarais, member of the AICPA personal financial planning executive committee, said in a statement. “Now is the perfect time for Americans to check in on their financial plans to make sure that everything is in order.”

The PFS 750 Market Index, comprising the 750 largest companies trading on the U.S. market, was down 1.8 points from the previous quarter, to 90, and down 2.6 points from the year-ago quarter when it reached its all-time high. The PFS 750 Market Index continues to be the biggest contributor to the Pleasure Index.

Though fewer in the July-to-September period, job openings continued to exceed job seekers for the sixth consecutive quarter and remained the second largest contributor to the Pleasure Index overall. The Job Openings Per Capita index, which was based on July data, fell 2.1 points to 81.

The AICPA said this is the third time in three years that job openings had decreased quarter-over-quarter, and the first time they have decreased two quarters in a row in seven years.

The Real Home Equity per Capita index at 72, based on data issued for April, was 4.7% above the prior-year value and flat with the previous quarter level.

According to the AICPA, the changes in value were due to increases in the market value of real estate, whose most recent reading came in about 5.5% per annum. This was enough to exceed increases in mortgages outstanding, which have been advancing at about 2.5% per annum.

Pain Index

The Pain Index, also comprising four equally weighted components, fell 0.3 points to 35.4 in the third quarter. Increases in underemployment and inflation balanced out decreases in taxes and loan delinquencies.

The Personal Taxes index led the overall decrease in the Pain Index, falling 1.6 points to 48.  Even though quarterly levels have been relatively flat since the tax overhaul, this factor has been an outsize contributor to financial pain. According to the AICPA, it has been the biggest contributor to financial pain for 10 of 12 quarters.

“With 2019 quickly coming to an end, time is running out to take advantage of tax and financial planning strategies that will put you in a more favorable position come tax filing time next April,” Scot Dobbs, member of the AICPA’s personal financial planning executive committee, said in the statement.

“For example, Americans saving for retirement should aim to maximize contributions to their available retirement plans, whereas retirees over 70 1/2 years old need to make sure they’ve taken any required minimum distributions to avoid penalties.”

The Loan Delinquencies index recorded a 1.4-point drop from the previous quarter to 27. This factor experienced improvements equally weighted across mortgages and all loans.

Though the current reading of delinquencies on mortgages, at 2.6%, is well below the 11.3% peak delinquency rate for mortgages set in the spring of 2010, it is still above the 2.1% that was typical between 1994 through 2003, the AICPA said.

For the third quarter, the Inflation index was up 1.3 points to 34, based on the Federal Reserve’s August level. Inflation is the most volatile factor contributing to the PFSi; with absolute levels so low, small changes result in large percent gains.

The PFSi blended inflation measure for the third quarter was 1.4%, versus 2.3% a year ago and 1.4% last quarter. The AICPA noted that the Fed’s target for inflation, which eliminates the contributions of food and oil, is about 2%. Core inflation is currently at 2.4%.

The Underemployment factor registered 32, up 0.5 points over the last quarter. By comparison, its peak value was 84.3 in the fourth quarter of 2009. It is now a little over 15% below its average value in the two years before the recession.

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