You have to go all the way back to 2015 to find Americans’ financial satisfaction levels as low as they were in the second quarter of this year, no thanks to the economic damage caused by the coronavirus pandemic, the American Institute of CPAs reported last week.
The AICPA’s second-quarter personal financial satisfaction index measured 15.2, down 18.5 points from the first quarter, the biggest drop in the index’s history. The previous record was a 16.3-point decline in the 2007 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 second quarter, the Pleasure Index dropped to 59.7 from 69.5 in the previous quarter, while the Pain Index rose to 44.5 from 36.6.
The main factor causing the quarter-over-quarter PFSi decline, and hurting overall financial satisfaction, was a 75-point increase in the Pain Index’s underemployment sub-index to 106, a record. The second-quarter level reflects data measured through the middle of June.
On Thursday, the Labor Department reported seasonally adjusted initial jobless claims of 1.434 million, up 12,000 from the previous week’s revised level.
The second largest contributor to the PFSi’s decline from the first quarter was the AICPA’s CPA Outlook Index, a sub-index of the Pleasure Index, which fell 35 points to 17. This factor captures the expectations of CPA executives in the year ahead for their companies and the U.S. economy.
It is the only index factor that is calculated from sentiment, which was captured in a survey conducted in May, the AICPA said. Its decrease was primarily driven by a steep decline in optimism about the U.S. economy’s outlook over the next 12 months.
Also notably contributing to the PFSi decline was a 25-point drop in the Pleasure Index’s job openings factor to 53, based on Bureau of Labor Statistics data through April.
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Americans started the year experiencing record high levels of personal financial satisfaction. And even with the record decline in the PFSi, its current value of 15.2 is still 55.5 points higher than its all-time low of -40.3 set in the 2011 third quarter, according to the AICPA.