Stock market gains and job opportunities improved the average American's financial outlook in the second quarter of 2018, according to the AICPA's Personal Financial Satisfaction Index (PFSi). The index measured 27.7, a record high.
The PFSi weighs positive and negative economic influences on Americans' financial well-being. A positive rating means financial pleasure outweighs financial pain.
Most indicators of Americans' financial satisfaction trended up in the second quarter. Job openings set U.S. records in January, March, and April, with most opportunities created in the private sector in professional and business services, trade, transportation, warehousing, utilities, and other industries. Most growth was in the West and Midwest.
The PFS 750 Market Index, a proprietary stock index, climbed 5.2% from the previous quarter to set a record at 89 points. The information technology industry has led stock market growth both in the quarter and the past year, while the real estate and telecom sectors lost ground.
Investors should maintain a balanced portfolio amid this growth, said Robert Westley, CPA/PFS, a member of the AICPA Personal Financial Specialist Credential Committee.
"It is prudent for investors to revisit their asset allocation, keeping in mind the importance of holding safer assets intended to dampen the volatility of the overall portfolio. Given the pickup in market volatility in 2018, investors should tune out the noise and maintain focus on their long-term goals," he said.
Three measures of Americans' financial discomfort continued to improve compared with the prior year and quarter: loan delinquencies, underemployment, and personal taxes.
One indicator, inflation, rose substantially from last quarter. The annual inflation rate reached 2.3%, up from 1.7% the previous quarter, and higher than the Federal Reserve's target of 2%. As measured by the PFSi, inflation reached a six-year high.
Additional information about the PFSi can be found at aicpa.org/PFSi.