Americans’ robust feeling of financial well-being at the end of 2019 has soured as the coronavirus pandemic has strained the U.S. economy and millions of people have lost their jobs, according to the first-quarter Personal Financial Satisfaction Index, published Thursday by the American Institute of CPAs.
The PFSi dropped 8.3 points from the fourth quarter to 32.9, the largest quarterly decline the index has experienced since the 2009 fourth quarter.
The PFSi is calculated every quarter 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.
In the first quarter, the Pleasure Index dropped to 69.5 from 74.9 in the previous quarter, while the Pain Index rose to 36.6 from 34.7.
The AICPA noted that the first quarter calculation used economic data that was largely measured before the pandemic got its hooks into the U.S. economy. It said the 22 million Americans who have filed for unemployment benefits since mid-March and the growing number of people who are struggling to pay bills and meet other expenses will be reflected in the second-quarter PFSi.
The Labor Department reported Thursday initial jobless claims of 4.4 million in the week ended April 18, bringing the five-week total during the pandemic to 26.5 million.
According to the AICPA report, the most notable factor driving the quarter-over-quarter PFSi decline was the PFS 750 Market sub-index, an AICPA proprietary stock index that comprises the 750 biggest companies trading on the U.S. market.
In comparison with its fourth-quarter record high, the Market sub-index fell 21 points, wiping out all its gains from the past three years.
The next largest contributor to the PFSi decline was the Inflation sub-index, which rose 34 points from the previous quarter. An increase in inflation adds to financial pain, driving down the PFSi overall.
The report noted that inflation is the most volatile factor contributing to the PFSi and with absolute levels so low, small changes result in large percent gains. For the current reading, this factor relied on data released in late March that reflected the Federal Reserve’s February level before it cut rates to near zero.
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