Americans’ financial satisfaction hits high mark
The AICPA’s Personal Financial Satisfaction Index (PFSi) reached a record high in the first quarter of 2018 — an indicator that Americans are still feeling positive about their financial situation, even despite recent stock market volatility. The PFSi increased 1.5 points (6.2%) over last quarter, reaching an all-time high of 26.1 points. It is up 12.4 points (90.9%) from the first quarter of 2017.
The PFSi, a quarterly economic indicator from the AICPA, examines a range of economic factors to calculate the average American’s financial standing. It measures the difference between two component subindexes: the Personal Financial Pleasure Index and the Personal Financial Pain Index.
This quarter marks the first time the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, was reflected in the PFSi. Personal taxes, one component of the Pain Index, decreased by 4.2 points (7.3%) since last quarter.
Lisa Featherngill, CPA/PFS, a member of the AICPA Personal Financial Planning Executive Committee, said the TCJA will continue to provide opportunities for business owners in the future but added that consumers should remember it has an expiration date.
“Remember, most of the provisions of the tax law are temporary and expire December 31, 2025,” she said. “There is limited time to experience the opportunities — or the pain.”
The PFS 750 Market Index, one component of the Pleasure Index, declined this quarter for the first time since 2015. A proprietary stock index developed by the AICPA, the PFS 750 dropped 3.5 points (4%) from Q4 2017.
Job openings per capita, a component of the Pleasure Index, increased 4.9% over last quarter to reach an all-time high. Nationwide, job openings totaled 6.3 million in January.
While this quarter’s results are positive, Mark Astrinos, CPA/PFS, a member of the AICPA Personal Financial Specialist Credential Committee, reminded CPAs and their clients to continue to think strategically and responsibly.
“While consumers and investors are, overall, benefiting from the economic surge, these periods should be seen as opportunities to plan for more challenging times that undoubtedly will come,” he said. “We know from history that economic cycles repeat and so, while it’s tempting to bask in prosperity, consumers should make sure they have the financial safeguards in place such as maintaining adequate cash reserves and not overextending on their credit.”
By Lea Hart