Financial satisfaction takes biggest dive since Great Recession

By Samiha Khanna

Economic woes brought on by the coronavirus pandemic have triggered the steepest quarterly decline in Americans’ personal financial satisfaction since the recession that began in 2008. The AICPA Personal Financial Satisfaction Index (PFSi) dropped 20% since last quarter. It’s down 14.2% from the first quarter of 2019.

In the last quarter of 2019, Americans were experiencing record-high levels of personal financial satisfaction, the index showed. That positive financial picture rapidly declined in the first quarter of 2020 due largely to a 21% decline in the AICPA’s PFS 750 Market Index and a nearly 34% increase in inflation. Losses in the markets were enough to wipe out three years of steady gains in the PFS 750 Market Index.

The PFSi, a proprietary economic indicator released quarterly by the AICPA, tracks the personal financial satisfaction of the average American. It consists of the difference between two subindexes: the Personal Financial Pleasure Index and the Personal Financial Pain Index. The Pleasure Index weighs four factors: home equity, job openings, the PFS 750 Market Index, and the CPA Outlook Index, a quarterly survey of CPA executives. The Pain Index also weighs four factors: inflation, taxes, underemployment, and loan delinquencies.

As assessed for the PFSi, job openings dropped 5.2% from last quarter, while home equity and the CPA Outlook Index stayed almost the same. Loan delinquencies were down 4.2% from last quarter, while underemployment rose 3.6% and taxes rose 1.5%. As many of these factors were assessed in February 2020, however, the PFSi does not yet reflect the full impact of the COVID-19 pandemic upon the economy.

Advice for responding to the economic downturn

Climbing unemployment and other financial uncertainties have created an especially challenging time for millions of Americans, said Andrea Millar, CPA/PFS, director–Personal Financial Planning at the Association of International Certified Professional Accountants.

Many Americans have lost jobs or have been forced to temporarily shutter their businesses, Millar said. In addition to applying for unemployment benefits, those who have lost portions of their income can reexamine their assets and everyday expenses to find opportunities to save, she said.

“If applicable, dig deeper into your finances to set a budget, as you may find that there are nonessential expenses that can be cut,” Millar said. “It may also be a good time to get other financial necessities in order such as organizing your financial records and making sure your basic estate planning and health care documents and insurance policies are up to date.”

For Americans who are in good financial shape, now may be a time to consider additional investments, while keeping in mind how gains could impact taxes down the road, she said.

“Consider contributing more to your retirement accounts while you can buy low and converting traditional IRAs to Roth IRAs while values are down, as any growth in a Roth IRA will be tax-free,” Millar said. “Also, make sure to not get caught off-guard with the capital gains that may be reported from mutual funds at year end, by realizing some losses to offset your gains.”

The sudden changes, with little insight on when conditions may improve, may prompt some investors to pull money out of the stock market. But the best course of action may be to hold steady, Millar said.

“It’s important to acknowledge and process your thoughts and feelings during this time of uncertainty so that you can make decisions from a place of calm rather than fear,” she said. “It would be perfectly normal to want to take your money out of the stock market and run. However, if you take time to put things in perspective and understand how markets have performed in the past after times of demand and supply shock, it may help you to stay the course.”

More information about the PFSi is available at

Samiha Khanna is a freelance writer based in North Carolina. To comment on this article or to suggest an idea for another article, contact Ken Tysiac, the JofA’s editorial director, at

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