Financial satisfaction hits a high in USA - AICPA
Despite political uncertainty, both at home and abroad, financial satisfaction in the USA is at its highest in almost nine years.
The American Institute of CPAs (AICPA) says that the quarterly personal financial satisfaction index (PFSI) shows Americans' satisfaction with their financial situation rose to its highest since 2007.
According to the AICPA, the increase is a result of improvements in home equity, job openings, and a rise in the AICPA CPA Outlook Index which records the expectations of executives relating to business expansion, revenues, profits, and spending, among others.
The PFSI, which is calculated as the 'personal financial pleasure index' less the 'personal financial pain index', stands at 17.1, 3.4 points up on last quarters figure and a 1.2 point jump from the same date last year.
Home, sweet home
One of the main positive influencers on the rise of the PFSI has been an overall growth in home equity across the US. The AICPA states that this is “due to increases in the market value of real estate, helped by tight supply in many markets and low mortgage interest rates".
“The increase in home equity has many baby boomers finally thinking about down-sizing to capitalise on that equity, and there is an eager market of older millennials who are finally ready to make their first home purchase," said Kelley Long, CPA/PFS, a member of the AICPA’s National CPA Financial Literacy Commission.
“Low mortgage rates combined with great job opportunities are giving people confidence to make some moves that maybe they’ve been putting off and this is a great sign for continued economic prosperity.”
Although there has been an average growth of home equity across the country as a whole, real estate markets vary from state to state. Colorado, Oregon, Nevada, Utah, and Washington are among the states which saw the highest year on year house price increase, ranging from 7.6% to more than 10%.
The states with prices furthest from peak values are Arizona, Florida, Maryland, Nevada, and Rhode Island.
Brexit effects still to come?
As the UK voted to leave the EU fairly late in the quarter this index is based on, the full implications of how it will impact the US may not yet be evident.
The AICPA is predicting that some US individuals and corporations may “feel some pain in the coming quarters” as a result of Brexit.
Going on to say that there is a feeling of caution surrounding the potential effects on the US economy, the institute points towards Brexit as the reason for the Federal Reserve holding off on raising interest rates.
“The UK’s decision to leave the European Union on June 23 was shocking and the Dow plummeted nine hundred points during the first two trading days after the vote,” said Michael Eisenberg, CPA/PFS, a member of the AICPA’s National CPA Financial Literacy Commission.
“By the end of that next week, all the losses were recouped, as the shock wore off. However, for the long term there might be more of a financial impact as many big financial companies may cut their hiring plans.”