Americans enjoyed a 10-year high in their personal financial standing during the second quarter of 2017, according to the AICPA Personal Financial Satisfaction Index (PFSi).
The index weighs positive and negative economic factors that contribute to the personal financial well-being of the average American. A positive rating means that financial pleasure in the form of market gains, job openings, and other factors outweighs financial pain in the form of inflation, loan delinquencies, underemployment, and personal taxes.
The PFSi reached 24.1 for the second quarter of 2017—its highest standing since the end of 2006 and a 7.3-point increase over the second quarter of 2016. Much of the change can be attributed to a decrease in inflation and a strong stock market, as measured by the AICPA PFS 750 Market Index.
The index also showed a 4.8-point gain in job openings per capita compared with the previous year, particularly in the leisure and hospitality industries.
The index also gained because several negative influences on Americans' financial satisfaction weakened in the second quarter. Personal taxes declined slightly, down 1.4 points from the previous year. Loan delinquencies dropped 2.7 points from the previous quarter and 9.9 points compared with the previous year.
Most notably, inflation dropped 16.5 points on the PFSi blended inflation index compared with the previous quarter, measuring at 1.4% nationally. Even with positive trends, individual investors should proceed thoughtfully, personal financial planners advised.
"While it's always a good idea for individuals to review their long-term financial plan on a regular basis, changes in the macroeconomic landscape make this practice even more important," said Mark Astrinos, CPA/PFS, a member of the AICPA PFS Credential Committee. "Given that the market has been steadily climbing for some time, it would be prudent for investors to review their asset allocation to ensure that they're managing the risk of their portfolios."
Additional information about the PFSi can be found at aicpa.org/PFSi.