Financial satisfaction of people in the U.S. rebounded strongly in the third quarter of the year, according to a new survey by the American Institute of CPAs, reversing the lows in the second quarter in the midst of the recession brought on by the novel coronavirus pandemic.
The AICPA’s Q3 2020 Personal Financial Satisfaction Index measured 33.1, representing a whopping 99 percent (16.5 point) increase from the previous quarter. That’s the biggest quarterly increase in the 27-year history of the PFSi, and a complete turnaround from the second quarter, when the index had its largest ever quarterly drop.
Hannah Hood is a Virtual CFO at Summit Virtual CFO by Anders.
Alison Myers is an Executive Vice President of Employee Benefits for Venbrook Insurance Services. For almost two decades, Alison has specialized in Employee Benefits and has successfully built her practice by changing the conversation around insurance, bringing to work daily the simple belief that the health and well-being of employees is directly connected to a company's productivity and profitability.
Kirk Chartier is the chief strategy officer at Enova International Inc. and serves on the board of directors of the Online Lenders Association. He joined Enova in 2013 and has worked with the team using its technology and analytics driven online lending platform to develop new products in the U.S. and U.K. Prior to Enova, Kirk was EVP & CMO at optionsXpress, the award-winning online trading platform. He also was interim global product marketing leader at Electronic Data Systems. Kirk has an MBA from Syracuse University, a B.A. in economics from Holy Cross, and a B.S. in engineering from Worcester Polytechnic Institute. He served as a U.S. Marine Corps officer and combat pilot.
The PFSi is built around various factors, including the labor market. The gains can be mainly attributed to improvements in job openings per capita and underemployment. Those had the biggest impact on increasing the overall PFSi. The biggest factor driving the quarter-over-quarter rally was a 35 percent (37 point) decrease in underemployment. A decrease in underemployment improves overall financial satisfaction in the index. While there was an improvement in underemployment in the third quarter from Q2’s record high, it’s still 117 percent above its level a year ago. For the second consecutive quarter, underemployment is still the biggest negative contributor to the average American’s personal financial satisfaction. The Q3 underemployment level reflects data measured through the middle of September.
“As Americans continue to navigate the economic impact of the COVID-19 pandemic, it is important to remember that the fundamentals of financial planning haven’t changed,” said AICPA PFS Credential Committee chair Dave Stolz in a statement Thursday. “Though the stock market’s record performance is encouraging, 2020 has served as a reminder of the volatile nature of markets. As the impact of COVID-19 continues to play out across the country, investors should weigh their risk tolerance and ensure they have ample cash on hand. Further, a tax-efficient financial plan that includes a diversified portfolio can give confidence that long-term financial goals will remain within reach through this period of extreme uncertainty.”
The coronavirus put millions out of work, prompting job openings per capita to show a record plummet earlier this year. In the third quarter, job openings started to recover, climbing 37 percent (20 points) compared to Q2. That factor is now only 10 percent below its measurement a year ago before the pandemic. The Q3 index comes from July data from the U.S. Bureau of Labor Statistics.
