Americans’ financial picture looks solid at the start of the new year, according to the latest edition of a quarterly economic index released by the AICPA.
The Personal Financial Satisfaction Index (PFSi), a proprietary measure of the financial well-being of the average American, reached 15.9 in the fourth quarter of 2015, 9.1 points higher than it was this time last year. Drops in loan delinquencies and inflation are the two factors most responsible for the PFSi’s improved performance, but decreased underemployment and increased job openings and home equity also contributed.
A few indicators, however, suggest that the nation’s financial picture is not quite as rosy as it was last year. One component of the PFSi, the AICPA CPA Outlook Index (CPAOI), has dropped 9 points since the fourth quarter of 2014. The drop in the CPAOI, which gauges CPA executives’ sentiment toward the health of the economy and their organizations, indicates that CPAs are feeling more pessimistic about the economy.
The PFS 750 Market Index, a proprietary stock index that forms another component of the PFSi, was down 8 points from the fourth quarter of 2014.
The PFSi is calculated as the difference between two subindexes, the Personal Financial Pleasure Index and the Personal Financial Pain Index. The Pleasure Index comprises four equally weighted factors: job openings per capita, real home equity per capita, the PFS 750 Market Index, and the CPAOI. The Pain Index likewise measures four equally weighted factors: inflation, personal taxes, loan delinquencies, and underemployment.
The PFSi changed little from last quarter, when it stood at 15.8. The Pleasure Index’s 0.8-point drop was balanced out by a decline of 0.9 points in the Pain Index. Job openings per capita dropped 5 points this quarter, and the CPAOI fell 2 points. However, the PFS 750 Market Index rose 2 points. The loan delinquencies component was down 3 points, and underemployment was down 2 points.
The Pain Index has fallen 10.3 points since the fourth quarter of 2014, driven by a 19-point decline in inflation and an 18-point drop in loan delinquencies. Underemployment has fallen 8 points since this time last year, while the personal taxes component has risen 4 points.
—Courtney L. Vien (cvien@aicpa.org) is a JofA associate editor.
