Americans’ financial satisfaction hits high mark

Job openings and personal taxes countered volatility.

The AICPA's Personal Financial Satisfaction Index (PFSi) reached a record high in the first quarter of 2018 — an indicator that Americans are feeling good about their financial situation, despite recent stock market volatility. The PFSi increased 1.5 points (6.2%) over last quarter, reaching an all-time high of 26.1 points. It is up 12.4 points (90.9%) from the first quarter of 2017.

The PFSi, a quarterly economic indicator, examines a range of economic factors to calculate the average American's financial standing. It measures the difference between two component subindexes: the Personal Financial Pleasure Index and the Personal Financial Pain Index.

This marks the first time the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, was reflected in the PFSi. Personal taxes, one component of the Pain Index, decreased by 4.2 points (7.3%) since last quarter.

Lisa Featherngill, CPA/PFS, a member of the AICPA Personal Financial Planning Executive Committee, said the TCJA will provide opportunities for businesses, but she warned that it has an expiration date.

"Remember, most of the provisions of the tax law are temporary and expire December 31, 2025," she said.

The PFS 750 Market Index declined in the first quarter for the first time since 2015 — a 4% drop from the previous quarter. It is a proprietary stock index developed by the AICPA as one component of the Pleasure Index.

Job openings per capita, a component of the Pleasure Index, increased 4.9% over the previous quarter to reach an all-time high.

While the first-quarter results were positive, Mark Astrinos, CPA/PFS, a member of the AICPA Personal Financial Specialist Credential Committee, reminded CPAs and their clients to continue to think strategically.

"We know from history that economic cycles repeat," he said, "and so, while it's tempting to bask in prosperity, consumers should make sure they have the financial safeguards in place such as maintaining adequate cash reserves and not overextending on their credit."

SPONSORED REPORT

Get your clients ready for tax season

These year-end tax planning strategies address recent tax law changes enacted to help taxpayers deal with the pandemic, such as tax credits for sick leave and family leave and new rules for retirement plan distributions, as well as techniques for putting your clients in the best possible tax position.

RESOURCES

Keeping you informed and prepared amid the coronavirus crisis

We’re gathering the latest news stories along with relevant columns, tips, podcasts, and videos on this page, along with curated items from our archives to help with uncertainty and disruption.