Americans’ financial condition on the rise

Falling oil prices and lower taxes are decreasing stress on personal budgets.

Decreases in inflation, personal taxes, and underemployment have left Americans' financial picture looking rosier, new data from the AICPA reveal. The Q1 2015 Personal Financial Satisfaction Index (PFSi) stands at 13.1, up 6.5 points from last quarter and up 18.4 points from the first quarter of 2014.

The PFSi is an indicator of the financial standing of the average American based on both proprietary and official U.S. government data. It is calculated by subtracting one subindex, the Personal Financial Pain Index, from a second, the Personal Financial Pleasure Index.

This quarter's PFSi gains are largely due to a 10.5-point drop in the Pain Index. Inflation, one of the components of the Pain Index, fell 20 points this quarter owing to the dramatic decline in oil prices. The other three components of the Pain Index also declined this quarter: Loan delinquencies dropped 5 points, and underemployment and personal taxes each fell by 2 points.

The Pleasure Index was down a modest 0.2 points from last quarter, but it is up 7.9 points from a year ago. Increases in job openings (up 2.6%) and real home equity (up 1.7%), two components of the Pleasure Index, helped stem the index's slight overall decline.

The growth in the PFSi this quarter indicates that Americans' financial situation has improved since the beginning of the calendar year and that their financial opportunities are outweighing their financial losses.

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