September preliminary Money Anxiety stable at 71.6
September preliminary Money Anxiety Index came in at 71.6, the same level as in 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.
What is the Money Anxiety Index?
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 Index in the Last 12 Months
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.
Money Anxiety Index – 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.