The American Institute of CPAs reported Thursday that its quarterly Personal Financial Satisfaction Index reached an all-time high for the second quarter of the year, thanks to the record number of job openings and the strong stock market, and in spite of rising interest rates.
The PFSI measured 27.7, an all-time high for the index, representing a 0.7 point (2.6 percent) increase from the first quarter of the year and indicating that the average American should be feeling a strong sense of financial well-being.
The AICPA compiles its quarterly economic indicator by weighing various economic factors to calculate the financial standing of a typical American. The index is calculated as the difference between two component sub-indexes: the Personal Financial Pleasure Index and the Personal Financial Pain Index, which are each made up of four equally weighted proprietary and public factors that measure the growth of assets and opportunities in the case of the Pleasure Index, and the erosion of assets and opportunities in the case of the Pain Index. Positive scores of the PFSI indicate Americans are feeling personal financial pleasure, whereas negative scores indicate they are feeling personal financial plain.
The Q2 2018 Personal Financial Pleasure Index measured 72.2, a 2.8 point (4.0 percent) increase over the first quarter. That too represented a new all-time high for the Pleasure Index. The most significant improvement came in job openings per capita, which rose 5.9 points (11.0 percent) over the previous quarter to 76, also a new high. The AICPA has been compiling the PFSI and its components since January 2014.
The AICPA points to several positive trends in the second quarter. Overall job openings set records, with almost 6.7 million in April. The number of job openings increased in professional and business services such as accounting, as well as trade, transportation, warehousing, utilities and several other industries. In May, the most American workers in 17 years quit their jobs, a sign of strength in the job market as more people were confident they could find a new position with higher compensation.
“A great job market is the perfect time for Americans to shore up their emergency fund, double check they’re making the most of their work benefits, and even consider shopping around to see if there is a better financial opportunity in their field,” said Kelley Long, a member of the AICPA’s Consumer Financial Education Advocates, in a statement. “In these times of increased market volatility, the best thing to do is stay the course, unless you’re near retirement. If that’s the case, then now is a great time to rebalance your portfolio to ensure you have adequate cash set aside, so that when the market does inevitably take a downturn, your retirement plans aren’t affected.”
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