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.
Maxfield Marquardt is senior counsel and director of regulatory affairs at Trusaic.
Nikolai J. Sklaroff has spent more than 28 years in the public finance industry, as a generalist with special expertise in credit engineering difficult and unusual financings. During his public finance career, he has served as an investment banker for 17 years as well as a senior rating analyst and a financial advisor. He joined Wells Fargo Securities as the senior general infrastructure investment banker in San Francisco in 2011. He has also worked as a senior investment banker with Citigroup Global Markets (originally Smith Barney) and J. P. Morgan Securities. Prior to becoming an investment banker in 1997, Nikolai was a senior Moody's Investors Service rating agency analyst and member of Moody's rating committee for eight years. Nikolai began his career as a financial advisor with Public Financial Management, Inc. in his hometown Philadelphia. A frequent speaker at industry conferences he has also served on multiple boards and advisory committees.
Matt Posner is founder and principal of CSG. Mr. Posner has more than a decade of experience in public finance and policy. He has testified before the U.S. Senate Committee on Finance on infrastructure finance problems facing the country and spent years educating staff in the U.S. House of Representatives, the U.S. Senate, the U.S. Treasury Department and the Securities and Exchange Commission on public policy and market implications. Mr. Posner has been quoted on his views and published in the Wall Street Journal, the New York Times, Bloomberg News, The Bond Buyer, the Municipal Finance Journal and the Government Finance Officers Association’s Government Finance Review, among others. Court Street Group LLC is a research and consulting firm based in Brooklyn, New York. At CSG, we build bridges among Washington, Wall Street and the Fintech worlds with strong market research and extensive, independent policy experience. CSG also has ties to Latin America and helps clients navigate there.
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.
