Despite Political Uncertainty, Americans’ Financial Satisfaction Hits Nearly Nine Year High, According to Q2 AICPA Index

July 28, 2016

NEW YORK (July 28, 2016) – When the stock market is up and home values are rising, people are usually feeling a good deal of personal financial satisfaction. However, with political uncertainty in the news at home and abroad throughout the last quarter – from the U.S. presidential campaign to the UK’s Brexit referendum – Americans could be forgiven for not noticing how their fortunes have been slowly and steadily improving.  Despite these concerns, the 2016 second quarter PFSi (Personal Financial Satisfaction Index), released today by the AICPA found that Americans’ financial satisfaction climbed to its highest level since the third quarter of 2007.

The PFSi, calculated as the Personal Financial Pleasure Index minus the Personal Financial Pain Index represents the financial standing of a typical American, uses both proprietary and normalized official Government data. The index was propelled by a notable increase in the AICPA CPA Outlook Index and improvements in home equity and job openings.

The index stands at 17.1, a 3.4 point increase from the prior quarter and a 1.2 point increase from a year ago. The increase from the prior quarter was based on an increase in the Personal Financial Pleasure Index of 2.1 points as well as a 1.3 point decrease in the Personal Financial Pain Index. 

The Personal Financial Pleasure Index, at 61.6, is 2.1 points higher than the prior quarter and 0.1 points down from the prior year.  The gain over the previous quarter’s level was due to a five point increase in the AICPA CPA Outlook Index, an index that captures the expectations of executives for such factors as business expansion, revenues, profits, and spending, among others. Two point improvements in both home equity and job openings also contributed to the increase in the PFSi.    

Home equity has grown due to increases in the market value of real estate, helped by tight supply in many markets and low mortgage interest rates.  Real estate markets are local and the values vary greatly from state to state.  The states registering the highest year over year home price increases, ranging from about 7.6 percent to more than 10 percent, are Colorado, Oregon, Nevada, Utah, and Washington.  The states with prices furthest from peak values, ranging from 23 percent to 33 percent, are Arizona, Florida, Maryland, Nevada, and Rhode Island.  Nationally, home prices remain about eight percent below their all-time high.  Since there are some areas where home prices are more than a quarter off of their peak value and are down eight percent nationally, there is potential for continued price improvement and therefore a further increase in personal financial satisfaction. 

“The increase in home equity has many baby boomers finally thinking about down-sizing to capitalize on that equity, and there is an eager market of older millennials who are finally ready to make their first home purchase, said Kelley Long, CPA/PFS, a member of the AICPA’s National CPA Financial Literacy Commission.  “Low mortgage rates combined with great job opportunities are giving people confidence to make some moves that maybe they’ve been putting off and this is a great sign for continued economic prosperity.”

The AICPA CPA Outlook Index is five points higher than the previous quarter, but is four points lower than a year ago.  The U.S. economy optimism index component partially rebounded in the second quarter from a sharp drop in the previous quarter. The next strongest improvements were for revenue growth, expansion plans, and organizational optimism.  On an annual basis, the largest decline was in U.S. economy optimism, followed by profits and organization optimism.

The Pain component of the index, at 44.5, is 1.3 points lower than the previous quarter and 1.2 points lower than a year ago. This reverses most of last quarter’s increase, which was the first increase in the pain index since the first quarter of 2013.  The decrease in the overall value of the index from the prior quarter was due to a four point decrease in loan delinquencies and a one point decline in inflation, with taxes and underemployment flat. 

Since the UK’s vote to exit the European Union occurred late in the quarter, it may not have had a significant impact on the current index numbers.  However, it would not be surprising if U.S. individuals and corporations feel some pain in the coming quarters.  In fact, government officials are treading cautiously as the Federal Reserve cited Brexit as a reason not to raise interest rates and indicated that future interest rate hikes may be slower than previously planned.  Another potential challenge resulting from the UK’s move is if weakness in the British Pound impacts the Euro, the cost of American goods and services would increase and soften demand.

“The UK’s decision to leave the European Union on June 23 was shocking and the Dow plummeted nine hundred points during the first two trading days after the vote,” said Michael Eisenberg, CPA/PFS, a member of the AICPA’s National CPA Financial Literacy Commission. “By the end of that next week, all the losses were recouped, as the shock wore off.   However, for the long term there might be more of a financial impact as many big financial companies may cut their hiring plans.”  

The PFSi weighs a variety of economic factors to determine the financial standing of a typical American. It is the result of calculating the difference between the Personal Financial Pleasure Index and the Personal Financial Pain Index. The PFSi, calculated as the Personal Financial Pleasure Index minus the Personal Financial Pain Index represents the financial standing of a typical American, uses both proprietary and normalized official U.S. Government data.

Pleasure factors include the proprietary PFS 750 Market Index, comprised of the 750 largest companies by market capitalization trading on the U.S. markets, excluding ADRs, mutual funds and ETFs. The other components are the AICPA’s CPA Outlook Index, Real Home Equity Per Capita and Job Openings Per Capita. Pain factors include inflation, personal taxes, loan delinquencies and underemployment.

Additional information on the PFSi can be found at:

For a more information on the PFSi index, contact Marc Eiger at 212-596-6042, or James Schiavone at 212-596-6119,


The Personal Financial Satisfaction Index (PFSi) is the result of two component sub-indexes. It is calculated as the difference between the Personal Financial Pleasure Index and the Personal Financial Pain Index. These are comprised of four equally weighted factors, each of which measure the growth of assets and opportunities, in the case of the Pleasure Index, and the erosion of assets and opportunities, in the case of the Pain Index.

About the AICPA’s PFP Division
The AICPA’s Personal Financial Planning (PFP) Section is the premier provider of information, tools, advocacy, and guidance for CPAs who specialize in providing estate, tax, retirement, risk management, and investment planning advice to individuals, families and business owners. The primary objective of the PFP Section is to support its members by providing resources that enable them to perform valuable PFP services in the highest professional manner.

CPA financial planners are held to the highest standards and are uniquely able to integrate their extensive knowledge of tax and business planning with all areas of personal financial planning to provide objective and comprehensive guidance for their clients.  The AICPA offers the Personal Financial Specialist (PFS) credential exclusively to CPAs who have demonstrated their expertise in personal financial planning through testing, experience and learning.