The Pulse

Americans’ Financial Satisfaction Remains near All-Time High, Despite Recent Decline in Corporate Optimism

Riding a wave, Americans should be feeling a strong sense of financial well-being

NEW YORK (October 24, 2019) – Americans have been riding a wave of record high levels of personal financial satisfaction for the last two and a half years. However, decreases in job openings against the backdrop of a recent decline in corporate optimism in the U.S. economy have pushed the AICPA’s Q3 2019 Personal Financial Satisfaction Index (PFSi) down slightly from the prior quarter. However, the index remains firmly in positive territory and close to its recent record high indicating that the average American should be feeling a strong sense of financial well-being.

For the past two quarters, the PFSi has stalled and dipped slightly. The Q3 2019 PFSi measures 37.3, a 1.4-point (3.6 percent) decrease from the prior quarter. The decline was due to a 1.7 point (2.2 percent) drop in the Personal Financial Pleasure Index (Pleasure Index) outweighing a slight 0.3 point (0.8 percent) decrease in the Personal Financial Pain Index (Pain Index). Since the PFSi is calculated as the Pleasure Index minus the Pain Index, a decrease in the Pain Index increases the PFSi overall. However, in Q3, the decrease in the Pain Index was not enough to keep the overall PFSi from dropping. This is the third time in the past year that the index has decreased.

Pleasure Index Declines…

The Pleasure Index, at 72.6, is down 1.7 points (2.2 percent) from the previous quarter. Though down, the Pleasure index remains relatively close to its all-time high of 75.0 which was set just over a year ago in Q3 2018. The decline from the previous quarter was led by a drop in the AICPA CPA Outlook Index, which fell 2.8 points (5.5 percent), followed by a 2.1 point (2.6 percent) drop in job openings. The AICPA CPA Outlook Index captures the expectations of CPA executives in the year ahead for their companies and the U.S. economy. It’s decrease from the previous quarter was primarily driven by a 15-percentage point decline in optimism about the U.S. economy’s outlook over the next 12 months. So, while Americans are experiencing near record high levels of financial satisfaction, CPA executives have become somewhat more worried about the potential for an economic downturn in the year ahead.

“It’s important for Americans to keep in mind that economies are cyclical,” said David Desmarais, CPA/PFS member of the AICPA Personal Financial Planning Executive Committee. “Now is the perfect time for Americans to check in on their financial plans to make sure that everything is in order. That may mean making sure they aren’t overextended with debt (whether it be credit cards, lines of credit, auto loans, or home mortgages), and talking to their CPA about their goals, asset allocation, time horizon and risk tolerance.”

After the Tax Cuts & Jobs Act led to an initial decline of, the quarterly levels have been relatively flat. Still, this factor continues to be an outsize contributor to financial pain...

The PFS 750 Market Index, comprised of the 750 largest companies trading on the U.S. Market, is down 1.8 points (1.9 percent) from the previous quarter. Though down, it remains near its all-time high set a year ago in Q3 2018. The PFS 750 Market Index continues to be the biggest contributor to the Pleasure Index.

Though down, job openings continue to exceed job seekers for the sixth quarter in a row and remain the second largest contributor to the Pleasure Index overall, behind only the Market Index. The Job Openings Per Capita Index decreased 2.1 points (2.6 percent) below the prior quarter. This is the third time in three years that job openings have decreased quarter-over-quarter. Further, this the first time they have decreased two quarters in a row in seven years (Q3 2012).

… As Does The Pain Index

The Pain Index, at 35.4, is 0.3 points (0.8 percent) below the preceding quarter. The relatively flat reading is due to increases in underemployment and inflation being balanced out by the decreases in taxes and loan delinquencies. The overall decrease in the Pain Index from the preceding quarter was led by a 1.6 point (3.3 percent) drop in pain from personal taxes. After the Tax Cuts & Jobs Act led to an initial decline of 7.5 percent (3.9 points) in Q1 2018, the quarterly levels have been relatively flat. Still, this factor continues to be an outsize contributor to financial pain. In fact, over the last three years, the personal taxes factor has been the largest contributor to financial pain for 10 of 12 quarters.

Pain from loan delinquencies is down 1.4 points (4.7 percent) from the previous quarter. This factor saw improvements equally weighted across mortgages and all loans. Though the current reading of delinquencies on mortgages (2.59 percent) is well below the peak delinquency rate for mortgages (11.26 percent) set in the spring of 2010, it is still above what was typical between 1994 through 2003 (2.12 percent).

“With 2019 quickly coming to an end, time is running out to take advantage of tax and financial planning strategies that will put you in a more favorable position come tax filing time next April,” said Scot Dobbs, CPA member of the AICPAs Personal Financial Planning Executive Committee. “For example, Americans saving for retirement should aim to maximize contributions to their available retirement plans, whereas retirees over 70 1/2 years old need to make sure they’ve taken any required minimum distributions to avoid penalties.”

Additional Findings from the Q3 2019 PFSi:

For Q3, the Inflation index is up 1.3 points (4.1 percent) from the Q2 level. The Q3 Inflation index relies on the Fed’s August level. Inflation is the most volatile factor contributing to the PFSi and with absolute levels so low, small changes result in large percent gains. The PFSi blended inflation measure for Q3 is 1.4 percent. Please note that the Federal Reserve’s target for inflation is about 2 percent.

Underemployment is up a slight 0.5 points (1.7 percent) over the last quarter. Its peak value was 84.3 corresponding to 17.1 percent in the fourth quarter of 2009 (versus the current 7.4 percent). It is now just over 15 percent below its average value in the two years before the great recession.

The Real Home Equity Per Capita index, based on data issued for April, is flat with the previous quarter level. At its current reading, it is 3.4 percent below its 2006 all-time high.

Additional information on the PFSi can be found at:

Personal Financial Satisfaction Index Methodology
The Personal Financial Satisfaction Index (PFSi) is the result of two component sub-indexes. It is calculated as the difference between the Personal Financial Pleasure Index and the Personal Financial Pain Index. These are comprised of four equally weighted factors, each of which 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.





About the AICPA’s PFP Division
The AICPA’s Personal Financial Planning (PFP) Section is the premier provider of information, tools, advocacy, and guidance for CPAs and other professionals who specialize in providing estate, tax, retirement, risk management, and investment planning advice to individuals, families, and business owners. The primary objective of the PFP Section is to support its members by providing resources that enable them to perform valuable PFP services in the highest professional manner.
CPA financial planners are held to the highest ethical standards and are uniquely able to integrate their extensive knowledge of tax and business planning with all areas of personal financial planning to provide objective and comprehensive guidance for their clients. The AICPA offers the Personal Financial Specialist (PFS) credential exclusively to CPAs who have demonstrated their expertise in personal financial planning through testing, experience and learning, enabling them to gain competence and confidence in PFP disciplines.
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with more than 429,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. The AICPA sets ethical standards for its members and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives professional competency development to advance the vitality, relevance and quality of the profession.
About the Association of International Certified Professional Accountants
The Association of International Certified Professional Accountants (the Association) is the most influential body of professional accountants, combining the strengths of the American Institute of CPAs (AICPA) and The Chartered Institute of Management Accountants (CIMA) to power opportunity, trust and prosperity for people, businesses and economies worldwide. It represents 657,000 members and students across 179 countries and territories in public and management accounting and advocates for the public interest and business sustainability on current and emerging issues. With broad reach, rigor and resources, the Association advances the reputation, employability and quality of CPAs, CGMAs and accounting and finance professionals globally.