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.
John Starling is the senior vice president of Northern Bank’s 1031 Exchange and helps people and business entities preserve profit and build wealth faster through tax-deferred exchange.
Randy Kaston is the director of Business Law Group at Ligris + Associates. Her practice concentrates on all aspects of commercial and residential transactions, including representing lenders in closing complex commercial, asset-based, real estate, construction and SBA loans, as well as business lines of credit.
Lamine Zarrad is the founder and CEO of StellarFi, a credit builder that reports unlimited bill payments to the three major credit bureaus. Since 2008, Lamine has worked in various financial services roles, launching his career with Merrill Lynch and later transitioning to the public sector as a National Banker Examiner at the Office of the Comptroller of the Currency. Prior to Stellar, Lamine founded FinTechs Tokken and Joust. The latter was acquired by ZenBusiness where Lamine led the product organization through two fund raises, minting the company as one of the few Austin Unicorns. At StellarFi, Lamine and his team are on a mission to disrupt the U.S. poverty cycle and provide credit access to 132 million Americans with low or no credit. Lamine has been awarded a Bachelors in Business Administration in International Business and Russian Studies from the University of Texas at Arlington and a Masters of Public Affairs degree with a focus on Policy Analysis/Public Finance from the University of Texas at Austin. Lamine was born in the former Soviet Republic of Azerbaijan and came to the United States as a refugee prior to serving in the Marine Corps. Lamine speaks four languages and resides in Austin, Texas with his family.
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.
