Index dropped 1.2 points from July to August
SAN RAFAEL, Calif. (Sept. 8, 2014) — The September preliminary Money Anxiety Index came in at 71.6, the same level as the previous month. However, the September Money Anxiety Index is 1.2 points lower than in July indicating that the jolt in July was temporary due to concerns over the economic and financial conflict with Russia, which now has subsided in lieu of the talks between the presidents of Russia and Ukraine.
A more stable level of money anxiety among consumers in September likely to improve GDP performance in the 3rd quarter of this year as consumers tend to increase personal consumption when their level of money anxiety is lower. Conversely, as demonstrated in July, consumers reduce their personal spending when their level of money anxiety increases. Personal consumption in July declined $12.0 billion compared to an increase of $51.2 billion in June, a variance of $63 billion cased by higher level of money anxiety.
The Money Anxiety Index resembles a rollercoaster thus far this year. In the 1st quarter, the index increased 1.3 points to 79.2 then dropped 7.9 points in the 2nd quarter to 71.3, after which it increased 1.5 points during the July jolt, and lately dropped 1.2 points to its current level of 71.6. These fluctuations in the Money Anxiety Index are an indication of consumers’ uncertainty about the direction of the economy and, as a result, their own personal finances.
The Money Anxiety Index measures various economic indicators and factors associated with consumers’ level of financial worry and stress. The index is updated in the beginning of each calendar month. It consists of monthly measurement for over 50 years, and spans from January 1959 to date. Historically, the Money Anxiety Index fluctuated from a high of 135.3 during the recession of the early 1980s, to a low of 38.7 in the mid 1960s. The 50-year average is 70.7 (July 1980 = 100). The Money Anxiety Index Is highly predictive. It predicted the arrival of the Great Recession over a year prior to the official declaration of the recession in December of 2007.