The Money Anxiety Index shows that in the first quarter of 2014 consumers are exhibiting signs of financial fatigue from the longest and slowest economic recovery since the Great Depression. In the first quarter of 2014, the Money Anxiety Index remained mostly flat at 78.7 after nearly a year of constant improvement indicating that consumers are starting to feel the effects of a prolonged financial struggle.
During 2013, the Money Anxiety Index declined 14.8 points exhibiting substantial improvement in the level of consumer financial anxiety. However, in the first three months of 2014, the index remained flat at 78.7 indicating that consumers are showing signs of concern over the prospects of economic recovery. The financial fatigue consumers are exhibiting is mostly related to the prolonged economic recovery, which will enter its sixth year in couple of months. The Great Recession officially ended in June of 2009 initiating the longest economic recovery since the Great Depression.
Moreover, the current economic recovery produced the lowest and longest Fed funds rate of 0-0.25%, starting in December of 2008 – over six years ago. The low and prolonged period of virtually zero Fed funds rate is contributing to consumers’ financial fatigue because they are seeing their $10 trillion in bank deposits gradually eroding by inflation.
It’s possible that some of the factors contributing to the abrupt change in the level of consumers’ money anxiety are related to the severe weather conditions much of the country experienced during the first three months of this year. Nevertheless, the constant economic concern and financial struggle is starting to impact consumers’ level of financial anxiety.