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.
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.