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The Financial Satisfaction of the Average American is On the Rise

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Apr 20th 2015
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Finally, there’s good financial news for many Americans, according to the Q1 2015 PFSi (Personal Financial Satisfaction Index) report released by the American Institute of CPAs (AICPA) on April 16.

According to the report, decreases in inflation, personal taxes, and underemployment have lifted Americans’ overall financial satisfaction into positive territory.

The PFSi weighs a variety of economic factors to calculate the personal financial satisfaction of a typical American. Using both proprietary and normalized US government data, the PFSi is comprised of two component indices that measure positive (Personal Financial Pleasure) and negative (Personal Financial Pain) factors equally.

The PFSi registered at 13.1 for the first quarter of 2015, a 6.5-point increase from the previous quarter and an 18.4-point increase from this time last year.

“The increase in the PFSi signifies that the average American’s financial situation should be in better shape now than it was prior to the start of the year,” Susan Tillery, a member of the AICPA Executive Committee, said in a written statement. “As inflation has decreased and more people are finding full-time work, this is an opportune time to analyze your personal financial plan and take steps to build up reserves and refinance high-interest debt.”

Most of this year’s gain is attributed to the Pain Index – or inflation, personal taxes, loan delinquencies, and underemployment. The Pain Index declined 10.5 points during the first quarter, mostly due to a 20-point decrease in inflation – the most volatile pain factor – that was driven by a dramatic decline in oil prices.

Other factors contributing to the reduction in the Pain Index score include a 5-point decline in loan delinquencies and a 2-point decline in underemployment.

Personal taxes also declined by 2 points from the previous quarter.

On the other hand, the Pleasure Index score – driven by improvements in job openings (up 2.6 percent) and real home equity (up 1.7 percent) – only advanced  slightly (.2 points) from the last quarter.

“Despite slight advances and declines within the financial pleasure and pain factors in the last quarter, the continued improvement in the PFSi score indicates that Americans’ financial opportunities have continued to expand faster than their potential loss in financial well-being,” Tillery said. “Now is an excellent time for Americans to review their own financial situation with a CPA financial planner. This relationship will help them feel more confident in their decisions and financial strategies in the future.”

The Pleasure Index is comprised of such factors as: PFS 750 Market Index (the 750 largest companies by market capitalization trading on the US markets, excluding American depositary receipts, mutual funds, and exchange-traded funds), AICPA CPA Outlook Index, real home equity per capita, and job openings per capita.

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