Financial satisfaction reached all-time high in Q4, says AICPA

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The American Institute of CPAs’ Q4 2019 Personal Financial Satisfaction index (PFSi) has reached a new high for the seventh time in the last ten quarters after plummeting to record lows in the third quarter of last year, thanks to a late 2019 surge in the stock market.

The PFSi, a quarterly economic gauge that measures the personal financial standing of a typical American, reached 40.2 in the fourth quarter of 2019, or 1.6 points above the prior record of 38.6, which occurred in the first quarter of 2019. The index also reflects an increase of 2.9 points over the third quarter. The main factor driving the increase was the PFS 750 Market index, an AICPA proprietary stock index made up of the 750 largest companies trading on U.S. capital markets.

“The stock market’s performance over the last decade is a perfect example of why it’s important to remain focused on the long-term goals of your financial plan,” said Dave Stolz, chair of the AICPA’s PFS Credential Committee, in a statement. “If you had gotten out of the market or moved into more conservative assets after the Great Recession, you would have missed out on the decade’s big gains. This underscores why it is important to resist temptation to respond when the market fluctuates and instead stay the course with a financial plan that incorporates a risk tolerance you are comfortable with and a time horizon specific to your personal financial goals.”

Two factors related to the labor market — job openings per capita and underemployment — also had a major impact on improving the overall index. Underemployment started the decade at an all-time high and now, 10 years later, is at an all-time low. The only factor that didn’t improve in the overall index this past decade was pain from personal taxes. That factor went up and is nearly double what it was at the beginning of the decade, despite the passage of the Tax Cuts and Jobs Act of 2017.

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AICPA Financial planning Economic indicators