AICPA: Americans More Satisfied With Finances

Spurred by significant reductions in inflation and loan delinquencies, the 2015 fourth quarter PFSi (Personal Financial Satisfaction Index) released by the AICPA shows that Americans’ personal financial satisfaction has increased substantially from a year ago.

The index registered 15.9 in the fourth quarter, an almost 134% increase from the 2014 fourth-quarter level of 6.8. However, there was only a 0.1 increase in the PFSi from the previous quarter, indicating the momentum of increased personal financial satisfaction has slowed, the AICPA reports.

The PFSi is calculated as the difference between the Personal Financial Pleasure Index and the Personal Financial Pain Index. The slight gain from the prior quarter was due to a 0.8 decline in the pleasure index offset by a 0.9-point decline in the pain index.

The pain index is at 43.5, which is 19.1% lower than a year ago. This is led by a 68% decline in the inflation component from the previous year – the largest change in the period for any component of the pain or pleasure index. Inflation began to fall in mid-2014, and has been extremely low for all of 2015. The drastic decline in oil prices has been a major factor in low inflation rates.

“With the Federal Reserve increasing its rate by 25 basis points in the fourth quarter of 2015, inflation will continue to be a focus for the central bank,” says Jimmy J. Williams, a member of AICPA’s National Accreditation Commission. “Consumers should watch oil price fluctuations, as that has a strong impact on inflation and could become an important consideration in the decision to continue raising rates in 2016.”

A 23% reduction in loan delinquencies from the previous year, as well as a 15% decrease in underemployment also helped drive down the pain index.