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

Solving the lease accounting challenge

The challenges of the new lease accounting standard have been pervasive to say the least. In this free, independently-written report, you'll learn effective adoption strategies as well as resources for easing the transition to the new standard.

FEATURE

Tackling TCJA changes this tax season

Return preparers must be ready for how the Tax Cuts and Jobs Act has modified many common features of individual and business returns.