|Money Anxiety Index||
February preliminary Money Anxiety down to 66.5
February preliminary Money Anxiety Index is down to 66.5 following a spike to 67.7 in January. The January spike in consumers’ financial anxiety was caused by a disappointing fourth quarter GDP data showing 2.6 percent growth rate.
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.
How reliable are your financial projections?
Chances are that your financial projections are not very reliable if you are not using financial behavior as a factor in your model.
Only when you use financial behavior as a predictor in your model, you are assuring the reliability of your projection.
Whether you are projecting demand for your products or services, budgeting pricing level or forecasting the strength of the economy, you will increase the accuracy of your projection by using the Money Anxiety Index as the predictor in your model.
If you are wondering why some of your projections are wrong, consider that consumer financial behavior impacts the outcome just as much or even more than price in and of itself.
A lot is riding on your financial projection – get it right the first time.
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.