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.
Rema Matevosyan is the CEO and co-founder of Near Space Labs, a cutting-edge, high-resolution Earth imagery company for which she was featured in Forbes 30 Under 30. Prior to Near Space Labs, Rema worked as a researcher in Systems Engineering for Complex Aerospace Systems, informing the decisions of the European Commission regarding the Copernicus satellite network. Rema is an Emerging Space Leader and recognized scholar by the International Astronautical Federation and a published researcher in top journals including the American Institute of Aeronautics & Astronautics and The Institute of Electrical & Electronics Engineers.
Mike Lamble is managing partner of PremiumIQ, a specialist consultancy focused on data analytics needs of insurance companies. He was formerly CEO of Clarity Insights and managing director of Knightsbridge Solutions.
Sumit is a seasoned expert, with more than 24 years of experience in Automotive, IOT, Telecom and Healthcare Verticals. Sumit has always played the leadership role that allowed him to manage a P&L of close to US $ 0.5B across various organizations, such as Aricent, Nokia and Harman, enriching their domestic as well as international business verticals.
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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.
