Real Estate News

Financial satisfaction highest in a decade

Published: 28 Jul 2017

Americans may be in the mood for homebuying and other large purchases. According to the latest personal financial satisfaction index from the American Institute of Certified Professional Accountants, the figure hit a 10-year high for the second quarter of 2017. In particular, the index reached 24.1 points, representing a 7.6-point jump quarter over quarter.

So what does this figure mean? The AICPA gets the PFSi by measuring the difference between two indices: one that tracks financial pain and another that watches financial pleasure. The latest results showed a respective decline and increase, producing the notable rise compared to a decade ago.

Happy feelings all around
Economic indicators like stock market activity have given Americans reasons to be optimistic. The unemployment rate has also produced favorable changes, with the U.S. Bureau of Labor Statistics reporting the June unemployment rate stood pat month over month at 4.4 percent, while dropping 0.5 percentage points compared to the same month the previous year. Speaking with CNBC, Leonard Wright, a CPA and member for the AICPA's credentialing committee, echoed positive sentiment.

"People are feeling more comfortable with where they are financially," he told CNBC.

Wright also indicated inflation wouldn't see noticeable change in the near future. However, he did caution that Americans should remain frugal in their celebrations.

Savings is still key
Both Wright and fellow AICPA credentialing committee members David Stolz and Robert A Westley urged their clients and Americans at large to keep the goals of saving while reducing debt, both of which constitute steps to applying for a mortgage. In particular, Westley pointed out the Fed is likely to continue interest rate hikes, resulting in a rise in borrowing cost.

"In advance of future rate hikes, Americans should look to pay down their credit cards and other high-interest bearing debt as much as possible," he said in a press release. "Any future interest rate increase will result in higher monthly payments and therefore less disposable income and less financial satisfaction."

The Fed recently announced in its Federal Open Market Committee statement that it will keep the federal funds rate at 1 percent to 1.25 percent for now. Yet with the positive economic trends cited in the AICPA and economic data, Westley's prediction could come true as Americans need less federal agency for price stability.