December preliminary Money Anxiety down to 67.0
Only 4.7 points separate the December preliminary Money Anxiety Index, at 67.0 from its level on the eve of the Great Recession. Exactly seven years ago, in December of 2007, the Money Anxiety Index stood at 62.3, then climbing up to a high of 97.6 in the aftermath of the Great Recession, and gradually declining to its current level of 67.0. .
What is the Money Anxiety IndexTM?
The Money Anxiety Index measures various economic indicators and factors associated with consumers’ level of financial worry and stress. The Money Anxiety Index functions as an early-warning system to shifts in the economy, allowing financial advisors to react in time to changes in the economic cycle.
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. In the graph below, you can see how consumers’ money anxiety is trending upwards starting in October of 2006.
Money Anxiety IndexTM in the Last 12 Months
A major factor in the gradual improvement of the Money Anxiety Index is the continued positive news on employment. The November employment figures show that the economy added 321,000 nonfarm jobs, which is the strongest monthly gain in nearly three years increasing the three-month employment average to a gain of 278,000 per month.
Money Anxiety IndexTM – historical perspective
The Money Anxiety Index consists of monthly measurement of the level of consumers’ financial anxiety for over 50 years. It 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 was developed using Structural Equation Modeling (SEM) with a large sample size of monthly economic indicators meeting, the required measures of fit.