NEW YORK–(BUSINESS WIRE)–Less than two weeks before the presidential election Americans’ personal
financial satisfaction has risen the highest level since the first
quarter of 2007. On the strength of rising home equity and a decrease in
loan delinquencies, Americans are feeling substantially more personal
financial pleasure than pain, according to the 2016 third quarter PFSi (Personal
Financial Satisfaction Index), released today by the American
Institute of CPAs.
The PFSi, calculated as the Personal Financial Pleasure Index
minus the Personal Financial Pain Index, represents the financial
standing of a typical American. The third quarter index measured 19.0, a
1.7 point increase from the prior quarter and a 3.3 point increase from
one year ago. Positive readings indicate that Americans are feeling more
financial pleasure than pain.
The improvement from the prior quarter was due to an increase in the
Personal Financial Pleasure Index of 1.0 point and a 0.6 point decrease
in the Personal Financial Pain Index. While the PFSi is at the
highest level since the first quarter of 2007, it is still 23 percent
below the all-time high set in the fourth quarter of 2006.
The gain in the Personal Financial Pleasure Index over the previous
quarter’s level was due to improvements in every component, led by a 2.0
point increase in the PFS 750 Market Index, followed by a 1.3 point
increase in home equity, a 0.9 point increase in the CPA Economic
Outlook and a 0.3 increase in job openings per capita.
“With the country facing the uncertainty of a Presidential election, the
positive reading of the PFSi is a strong indicator that, despite
political turmoil, the average American’s financial situation is pretty
good these days,” said Kelley Long, CPA/PFS, member of the AICPA’s
Consumer Financial Education Advocates group. “American’s personal
financial satisfaction has continued to improve steadily and, regardless
of the outcome of the election, is trending in the right direction with
room to grow in 2017.”
The PFS 750 Market Index, which been the biggest contributor to the
Personal Financial Pleasure Index in recent years, enjoyed a ‘catch up’
quarter as many sectors rebounded from lackluster second quarter
performances. Some of the biggest gains were seen in biotech and
information technology companies, while utilities and consumer staples
Real home equity per capita grew due to increases in the market value of
real estate, which have exceeded increases in outstanding mortgages.
Portland, Ore.; Seattle; and Denver lead the way with the highest home
price gains from a year ago.
The AICPA CPA Outlook Index, which captures the expectations of CPA
executives in the year ahead for their companies and the U.S. economy,
was 2.1 percent higher than the previous quarter, largely on the
strength of increased optimism for profits.
On the employment side, job openings in the private sector increased in
professional and business services, as well as durable goods
manufacturing lead to a small gain in job openings per capita.
Geographically, the cities with the strongest job growth recently have
been those with growing populations, many of which have been bolstered
by demands for services due to retirees relocating.
“The PFSi shows that Americans’ financial satisfaction is back at
pre-recession levels, which is great news. However, the slow climb to
get there has been frustrating for people who are looking for work and
may still be underwater with their mortgage,” said Michael Eisenberg,
CPA/PFS, member of AICPA’s National CPA Financial Literacy Commission.
“While there have been substantial improvements in the job market, many
of the industries and regions hit the hardest are not back to their 2007
levels. This indicates we could see the index continue to rise if the
economy gains momentum post-election, causing employers to hire more
While financial pleasure is on the rise, financial pain continues to
decrease. The Personal Financial Pain Index at 43.1 is 0.6 points lower
than the previous quarter and 1.3 points lower than the year before. The
decline from the preceding quarter level was the result of a 3.4 point
decline in loan delinquencies, partially offset by a 0.6 point increase
in taxes and a 0.2 point increase in inflation, while underemployment
While underemployment did not improve from the prior quarter, but 7.6
percent below the third quarter level in 2015. Despite the gains, it
remains 20 percent behind the average value prior to the recession,
indicating that there is still room for substantial improvement if more
full-time jobs are created.
Inflation, the most volatile factor in the PFSi, continues to edge up
from historic lows even though it remains below the Federal Reserve
target of two percent. In fact, the decline of the pain index has slowed
during the past five quarters, compared to the two years prior as a
result of inflation’s slow rise.
Loan delinquencies were 6.3 percent lower than in the second quarter,
showing the growing strength in the housing market as delinquencies on
mortgages continue to decline.
Personal taxes showed an increase from the previous quarter, although
they declined from the year-ago level. Dating back to 1994, the highest
levels for personal taxes were 14% to 14.5% from late 1999 to mid-2000.
Current personal tax levels are about 30% below that high water mark.
Additional information on the PFSi can be found at: www.aicpa.org/PFSi.
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 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 AICPA
The American Institute of CPAs (AICPA) is the world’s largest member
association representing the accounting profession, with more than
418,000 members in 143 countries, 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
The AICPA sets ethical standards for the profession and U.S. auditing
standards for private companies, nonprofit organizations, federal, state
and local governments. It develops and grades the Uniform CPA
Examination, and offers specialty credentials for CPAs who concentrate
on personal financial planning; forensic accounting; business valuation;
and information management and technology assurance. Through a joint
venture with the Chartered Institute of Management Accountants (CIMA),
it has established the Chartered Global Management Accountant (CGMA)
designation which sets a new standard for global recognition of
The AICPA maintains offices in New York, Washington, DC, Durham, NC, and
Media representatives are invited to visit the AICPA Press Center at www.aicpa.org/press.
American Institute of CPAs (AICPA)