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Consumers acted in complete contrast in responses to consumer confidence surveys in the first two months of 2015, showing that what people say and what they do with their money are mutually exclusive .  In February of this year, the two leading survey-based consumer confidence indices reported a decrease in the level of consumer confidence from the previous month.  Yet, in actuality, consumers increased their consumption during February by about $12 billion or nearly 1 percent.  That is paradox because consumers spending should decrease with lower consumer confidence.

A similar but inverse scenario occurred in January of this year, when the two leading survey-based consumer confidence indices reported an increase in consumer confidence from the previous month.  However, actual consumer spending in January declined $28.5 billion or about 2.4 percent.  Here, again, a contradiction between what consumers reported to confidence survey and what they actually did with their money during the same month.

The Money Anxiety Index, which is based on what consumers actually do with their money, correctly reflected the financial confidence of consumers during the first two months of this year.  In January of this year, the Money Anxiety Index showed an increase of 0.9 points in the level of financial anxiety among consumers, i.e. lower confidence, which was accurately reflected by a decrease of $28.5 billion in personal consumption.  Similarly, in February of this year, the Money Anxiety Index showed a decrease of 2.5 points in the financial anxiety of consumers, i.e. higher confidence, resulting in an increase of $12 billion in personal consumption.   

The Money Anxiety Index measures consumers’ level of financial worry and stress based on financial activities.  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 Money Anxiety Index is highly predictive.  It signaled the arrival of the Great Recession over a year prior to the official declaration of the recession in December of 2007.   
Dr. Dan Geller is a financial behavior scientist exploring the link between the level of financial anxiety and the savings and spending habits of consumers.  In his book, Money Anxiety, Dr. Geller uncovers the mystery of the financial mind, explaining why we hate to lose more than we love to win and why we spend when safe and save when scared.

 
 
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A new study by the American Psychological Association (APA) confirms that anxiety over money is the leading cause of stress among the majority of Americans, and that the level of money anxiety fluctuates with the state of the economy.  The study, Stress in America published by APA  in February of 2015, shows that in 2007, which was the first year of this study, 74 percent of Americans cited money as the leading cause of stress.  The number of Americans reporting money anxiety as their leading cause of stress peaked in 2010 at 76 percent in the aftermath of the Great Recession, and gradually declined to 64 percent in 2014 as the economy improved.

The findings of the APY study validate the assertion of the Money Anxiety Index that financial stress is wide spread among Americans and that the level of money anxiety fluctuate with the economy, hence making money anxiety a reliable barometer of the economy.  The findings of the APA study mirror the fluctuation in the Money Anxiety Index.  In 2007, the Money Anxiety Index stood at 62.3; climbing up to 96.2 in 2010 and gradually declining to 67.3 at the end of 2014 due to improved economy.   

The Money Anxiety Index measures consumers’ level of financial worry and stress.  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 Money Anxiety Index is highly predictive.  It signaled the arrival of the Great Recession over a year prior to the official declaration of the recession in December of 2007.   

Dr. Dan Geller is a financial behavior scientist exploring the link between the level of financial anxiety and the savings and spending habits of consumers.  In his book, Money Anxiety, Dr. Geller uncovers the mystery of the financial mind, explaining why we hate to lose more than we love to win and why we spend when safe and save when scared.

 
 
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A solid employment growth of 295,000 jobs in February, and a three-month average of 288,000 jobs, is lowering the level of money anxiety among consumers.  Both, the unemployment rate and the Money Anxiety Index peaked in October of 2009, when the unemployment rate reached 10.1 percent and the Money Anxiety Index soared to 94.4.  

When the unemployment rate decreases so does the level of money anxiety because jobs provide financial confidence.  February’s unemployment rate is down to 5.5 percent and the Money Anxiety Index is down to 65.6 percent. The last time the unemployment rate was similar to todays was in June of 2008, when the unemployment rate stood at 5.6 percent and the Money Anxiety Index was 60.1.  

The Money Anxiety Index measures consumers’ level of financial worry and stress.  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 Money Anxiety Index is highly predictive.  It signaled the arrival of the Great Recession over a year prior to the official declaration of the recession in December of 2007.   
Dr. Dan Geller is a financial behavior scientist exploring the link between the level of financial anxiety and the savings and spending habits of consumers.  In his book, Money Anxiety, Dr. Geller uncovers the mystery of the financial mind, explaining why we hate to lose more than we love to win and why we spend when safe and save when scared.