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.
Lisa Servon is professor of city planning at the University of Pennsylvania. She was previously professor of urban policy at The New School, where she also served as dean at the Milano School of International Affairs, Management, and Urban Policy. She conducts research in the areas of urban poverty, community development, economic development, and issues of gender and race. Her most recent book is “The Unbanking of America: How the New Middle Class Survives.”
Theresa Hush is the CEO and Co-Founder of Roji Health Intelligence. She helps organizations take actions that will direct their future through meaningful technology and programs.
Jason Pett, PwC's US Internal Audit, Compliance & Risk Management Solutions Leader, Financial Services Risk Assurance leader and part of the Global Internal Audit leadership team, has over 20 years of experience delivering internal audit, external audit and risk management services. He has led full outsource, large co-source and strategic sourcing engagements for many prominent companies, including leading internal audit functions for globally diversified Fortune 500 companies. Jason's extensive experience also includes implementing enterprise wide risk and compliance programs for organizations in a variety of industries and building integrated and synergistic risk, compliance and internal audit programs to optimize alignment and efficiency of delivery. He has assisted organizations in the design of start-up internal audit, risk management and compliance functions as well as working with companies to transform existing internal audit, compliance and risk management functions into value added, risk based and strategically aligned functions.
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.
