<![CDATA[ Do you make the right financial decisions?<br /> - Blog]]>Thu, 27 Apr 2017 19:21:34 -0800Weebly<![CDATA[Lower Money Anxiety Supports Higher Interest Rates]]>Tue, 14 Mar 2017 14:42:49 GMThttp://moneyanxiety.com/1/post/2017/03/lower-money-anxiety-supports-higher-interest-rates.htmlPicture
March Money Anxiety Index is down to 58.0 making a strong case for a Fed rate hike this week.

The March preliminary Money Anxiety Index decreased 1.4 points to 58.0 since the beginning of this year indicating improved financial confidence.  Lower level of money anxiety increases consumer spending, which promotes economic activity and jobs growth.

The gradual decrease in the level of money anxiety enabled the Federal Reserve Bank (The Fed) to come very close to satisfying its two mandates of maximizing employment and stabilizing prices.  The Fed started increasing the funds rate in December of 2015, and since then the Money Anxiety Index decreased by 4.5 index points indicating that consumers feel more confident about the economic recovery.

An increase in the funds rate on March 15 means that borrowing cost, including mortgages, will increase slightly as well as interest rates on bank and credit union deposits.  However, deposit rates are likely to increase mostly for certificates of deposits (CDs) of 1 to 5 years, but not for any of the liquid accounts such as checking, savings or money market.

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<![CDATA[Money Anxiety Index lowest in 10 years]]>Fri, 09 Dec 2016 19:35:27 GMThttp://moneyanxiety.com/1/post/2016/12/money-anxiety-index-lowest-in-10-years.htmlPicture
A good holiday shopping season is very likely because the December Money Anxiety Index is the lowest it has been in 10 years.

The preliminary December Money Anxiety Index stands at 56.7, which is the same level it was 10 years ago.  The decrease in the level of money anxiety prior to the holiday season indicates that consumer spending is likely to increase this holiday season because consumers feel more financially confident.

During the past 10-year, the Money Anxiety Index peaked at 100.8 on June 2011. The climb up was much faster for the Money Anxiety Index than the road back down to its current level of 56.7.  It took the Money Anxiety Index 54 months to climb up to 100.8 compared to 66 months to decrease back to its current level of 56.7. 

The one-year time difference between the increase and decrease in the level of money anxiety shows that it takes longer to build financial confidence than to destroy it.  The impact of the lost jobs, property and wealth during and in the aftermath of the Great Recession was much stronger than the impact of the job gains and economic improvement during the recovery period. 

Dr. Dan Geller is a behavioral economist and the author of Money Anxiety.  He pioneered the research on the link between money anxiety and financial behavior.  Based on his research, Dr. Geller developed the Money Anxiety Index, which predicts economic trends.  The Money Anxiety Index signaled the arrival of the Great Recession 14 months prior to the official start of the recession in December 2007.

Dr. Geller appeared on national TV and radio, such as CNBC and Fox, national and financial publications and delivered the keynote address in national conferences such as American Banker’s Banking Analytics Symposium.  Dr. Geller earned his Doctoral degree from Touro University, and has published numerous peer-reviewed articles in scientific publications.

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<![CDATA[Once Again, Action Speaks Louder Than Words ]]>Wed, 09 Nov 2016 16:07:34 GMThttp://moneyanxiety.com/1/post/2016/11/once-again-action-speaks-louder-than-words.htmlPicture
Polls suggested a Clinton win; a no Brexit vote and no looming recession in 2007 – all were contrary to what people actually felt.

The election of Donald Trump as the next president of the U.S. is another proof that what people say in response to surveys does not necessarily match how they feel about the issue.  Polls taken close to the Election Day indicated a slight lead for Hilary Clinton in the presidential elections, but that was not the case.

In June of 2016, polls in the United Kingdom indicated that more people are going to reject a departure from the European Union.  In reality, more people voted to leave the EU, thus initiating the Brexit.  Here again, what people in the U.K. told pollsters was not necessarily how they actually felt about the issue.

Similarly, the disparity between what people say in response to confidence surveys and the way they actually behave with their money is a known phenomenon in behavioral finance.  One of the reasons consumer confidence indices were late to report on the looming recession in 2007 was because consumers remained optimistic in reporting to surveys, but acted contrary in real life.

A true measurement of financial confidence among consumers is achieved by measuring what consumers actually do with their money (objective) rather than ask them how they feel, which is subjective.  The Money Anxiety Index measures consumer financial confidence by observing actual financial behavior. 

The Money Anxiety Index is produced by Dr. Dan Geller, a behavioral finance scientist and the author of the book Money Anxiety.  The index measures the level of consumers’ financial worry and stress based on their spending and savings pattern.  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.  

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<![CDATA[Money Anxiety Index too close to call this elections.]]>Sat, 05 Nov 2016 19:17:17 GMThttp://moneyanxiety.com/1/post/2016/11/hillary-clinton-maintains-slight-money-anxiety-advantage.htmlPicture
The Money Anxiety Index shows a nearly equal chance for Clinton and Trump of winning the elections.

The Money Anxiety Index has a perfect track record for predicting presidential reelections.  If the November Money Anxiety Index is lower than January, the incumbent president is likely to win the reelections.  In January of this year, the Money Anxiety Index stood at 60.4, compared to 60.2 in November – a 0.2 index point lower, but within the margin of error.

Although Hillary Clinton is not up for reelection, her highly visible role as Secretary of State and her close affiliation to the Obama administration, make her run for the presidency a quasi reelection campaign.  In all 9 presidential reelections in the past 50 years, the incumbent won only when the Money Anxiety Index declined during the reelection year.  Conversely, presidents running for reelection lost when the Money Anxiety Index increased between January and November.

The most recent example is Obama’s reelection.  In January of 2012, the Money Anxiety Index stood at 90.9, and declined to 87.1 by November – a reliable indication that President Obama will be reelected based on the track record of the Money Anxiety Index to predict reelection outcome. In the past 50 years, incumbent presidents, running for reelection, won only when the Money Anxiety Index decreased between January and November of the reelection year. 

Aside from Obama’s reelection, there were 8 reelection campaigns in the last 50 years, and only 5 of them were successful.  All 5 presidents, who won reelection, were successful in lowering the Money Anxiety index between January and November of the reelection year.  President George W. Bush won reelection when during his reelection year, from January to November 2004, the Money Anxiety Index decreased from 59.6 to 58.2 – a decrease of 1.4 index points.  Similarly, President William J. Clinton won reelection when during his reelection year, from January to November 1996, the Money Anxiety Index decreased from 69.2 to 68.8 – a decrease of 0.4 index points. 

Conversely, President James E. Carter was not reelected to a second term.  During his reelection year, from January to November 1980, the Money Anxiety Index increased from 80.3 to 98.4 – an increase of 18.1 index points.  Similarly, President George H.W. Bush was not reelected to a second term.  During his reelection year, from January to November 1992, the Money Anxiety Index increased from 81.7 to 85.7 – an increase of 4.0 index points.

Historically, President Lyndon B. Johnson was elected after serving the remaining term of John F. Kennedy.  During his election year, from January to November 1964, the Money Anxiety Index decreased from 63.0 to 48.5 – a decrease of 14.5 index points.  The same was the case with the successful reelection of Richard M. Nixon.  During his reelection year, from January to November 1972, the Money Anxiety Index decreased from 71.5 to 64.5 – a decrease of 7.0 index points.  Similarly, President Ronald W. Reagan won a second term. During his reelection year, from January to November 1984, the Money Anxiety Index decreased from 91.8 to 84.4 – a decrease of 7.4 index points. 

On the other hand, President Gerald R. Ford, who run for reelection after serving the remaining term of President Nixon. During his reelection year, from January to November 1976, the Money Anxiety Index increased from 90.2 to 93.2 – an increase of 3.0 index points. 

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<![CDATA[Hilary Clinton maintains a slight lead in the September Money Anxiety Index]]>Mon, 05 Sep 2016 18:27:56 GMThttp://moneyanxiety.com/1/post/2016/09/hilary-clinton-maintains-a-slight-lead-in-the-september-money-anxiety-index.htmlPicture
If the Money Anxiety Index stays below 60.4 by Election Day, Hillary Clinton could become the next president.  If not, Trump is likely to win the elections.

The Money Anxiety Index has a perfect track record for predicting presidential reelections.  Although Hillary Clinton is not up for reelection, her highly visible role as Secretary of State and her close affiliation to the Obama administration, make her run for the presidency a quasi reelection campaign. 

In all 9 presidential reelections in the past 50 years, the incumbent won only when the Money Anxiety Index declined during the reelection year.  For Hilary Clinton, the index needs to be below the January reading of 60.4 to win the presidency. Conversely, presidents running for reelection lost when the Money Anxiety Index increased between January and November.

The most recent example is Obama’s reelection.  In January of 2012, the Money Anxiety Index stood at 90.9, and declined to 87.1 by November – a reliable indication that President Obama will be reelected based on the track record of the Money Anxiety Index to predict reelection outcome. In the past 50 years, incumbent presidents, running for reelection, won only when the Money Anxiety Index decreased between January and November of the reelection year. 

Aside from Obama’s reelection, there were 8 reelection campaigns in the last 50 years, and only 5 of them were successful.  All 5 presidents, who won reelection, were successful in lowering the Money Anxiety index between January and November of the reelection year.  President George W. Bush won reelection when during his reelection year, from January to November 2004, the Money Anxiety Index decreased from 59.6 to 58.2 – a decrease of 1.4 index points.  Similarly, President William J. Clinton won reelection when during his reelection year, from January to November 1996, the Money Anxiety Index decreased from 69.2 to 68.8 – a decrease of 0.4 index points. 

Conversely, President James E. Carter was not reelected to a second term.  During his reelection year, from January to November 1980, the Money Anxiety Index increased from 80.3 to 98.4 – an increase of 18.1 index points.  Similarly, President George H.W. Bush was not reelected to a second term.  During his reelection year, from January to November 1992, the Money Anxiety Index increased from 81.7 to 85.7 – an increase of 4.0 index points.

Historically, President Lyndon B. Johnson was elected after serving the remaining term of John F. Kennedy.  During his election year, from January to November 1964, the Money Anxiety Index decreased from 63.0 to 48.5 – a decrease of 14.5 index points.  The same was the case with the successful reelection of Richard M. Nixon.  During his reelection year, from January to November 1972, the Money Anxiety Index decreased from 71.5 to 64.5 – a decrease of 7.0 index points.  Similarly, President Ronald W. Reagan won a second term. During his reelection year, from January to November 1984, the Money Anxiety Index decreased from 91.8 to 84.4 – a decrease of 7.4 index points. 

On the other hand, President Gerald R. Ford, who run for reelection after serving the remaining term of President Nixon. During his reelection year, from January to November 1976, the Money Anxiety Index increased from 90.2 to 93.2 – an increase of 3.0 index points. 

Dr. Dan Geller is a behavioral economist and the author of Money Anxiety. He developed the Money Anxiety Index, which predicts economic trends.  The Money Anxiety Index predicted the arrival of the Great Recession 14 months prior to the official start of the recession in December 2007.  Dr. Geller has appeared on national TV and radio, such as CNBC and Fox, and delivered the keynote address at the American Banker’s Symposium.  Dr. Geller earned his Doctoral degree from Touro University, and has published numerous peer-reviewed articles in scientific publications. 

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<![CDATA[ The Money Anxiety Index is back to pre-recession level ]]>Sun, 07 Aug 2016 16:49:52 GMThttp://moneyanxiety.com/1/post/2016/08/-the-money-anxiety-index-is-back-to-pre-recession-level.htmlPicture
It took the Money Anxiety Index about 9 years to go a full cycle; 4 years to reach its post-recession peak and 5 years to go back down to its pre-recession level.

The preliminary August Money Anxiety Index stands at 59.8, which is the same as it was prior to the beginning of the Great Recession in November of 2007.  The Great Recession was officially declared a month later in December 2007, when the Money Anxiety Index started climbing up and then back down for a total of 9 years.

During its nearly 9-year cycle, the Money Anxiety Index peaked at 100.4 on September 2011.  The climb up was much faster for the Money Anxiety Index than the road back down to its current level of 59.8.  It took the Money Anxiety Index 47 months to go from 59.8 to 100.4 compared to 59 months to decrease back to its current level of 59.8.

 The one-year time difference between the increase and decrease in the level of money anxiety shows that it takes longer to build confidence than to destroy it.  The impact of the lost jobs, property and wealth during and in the aftermath of the Great Recession was much stronger than the impact of the job gains and economic improvement during the recovery period. 

The Money Anxiety Index is an early-warning system of shifts in the economy.   The 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.  The Money Anxiety Index was developed by Dr. Dan Geller, a behavioral economist and the author of Money Anxiety.

The Money Anxiety Index measures the level of consumers' financial worry and stress based on their spending and savings levels. 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.








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<![CDATA[ July Money Anxiety Down but Highly Volatile ]]>Fri, 08 Jul 2016 20:27:22 GMThttp://moneyanxiety.com/1/post/2016/07/-july-money-anxiety-down-but-highly-volatile.htmlPicture

The July preliminary Money Anxiety Index dropped 1.4 points to 60.4 from the revised June reading. The July figure of 60.4 is the third month in a row of high volatility.  In May, the Money Anxiety Index dropped 3.8 points to 59.3.  In June it increased 2.5 points to 61.8, and the July preliminary is down again by 1.4 points.

The volatility in the Money Anxiety Index reflects the extreme fluctuation in the jobs market.  The June jobs report shows an increase of 287,000 non-farm jobs, which is in complete contrast to the revised May report showing only 11,000 newly-added jobs.  This extreme volatility in the jobs report combined with the uncertainty about the aftermath of Brexit may prolong the volatility in the Money Anxiety Index for months to come.

By itself, the June jobs report is good news showing that hiring bounced back with 287,000 new jobs, which brings the three-month average to 147,000 jobs.  The FOMC minutes released on Wednesday showed that the committee was concerned about the health of the jobs market in its last meeting.  If future jobs report will continue to show moderate jobs gain, it is very likely that the fed will hike the funds rate in September or in December.  

About The Money Anxiety Index

The Money Anxiety Index is an early-warning system of shifts in the economy.   The 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.  The Money Anxiety Index was developed by Dr. Dan Geller, a behavioral economist and the author of Money Anxiety.

 

The Money Anxiety Index measures the level of consumers' financial worry and stress based on their spending and savings levels. 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.


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<![CDATA[Brexit Uncertainty May Cause U.S. Recession]]>Sun, 26 Jun 2016 17:05:34 GMThttp://moneyanxiety.com/1/post/2016/06/brexit-uncertainty-may-cause-us-recession.htmlPicture
The most immediate and adverse impact of the Brexit is financial uncertainty, which is the main cause of money anxiety.   The financial uncertainty caused by the collapse of Lehman Brothers in September of 2008, pushed the Money Anxiety Index 10 points higher within a few months after the event.

In September of 2008, the Money Anxiety Index stood at 73.9 and it jumped to 83.9 by December of that year.  The increase of 10 index points in such a short time period was the result of the financial and economic uncertainty surrounding the Lehman collapse.  It is plausible that a similar increase in money anxiety will occur as a result of the financial uncertainty caused by the Brexit.

Uncertainty is the root cause of money anxiety because of our biological makeup.  When people are faced with any type of uncertainty, their decision-making process defaults to the reptilian part of the brain, which is in charge of survival.  It is the same type of survival instinct that told our ancestors to hoard food and wood when they faced uncertainty from the elements.

Historically, higher money anxiety translates into lower spending and higher savings, which could slow down the U.S. economy or even push it into a recession over time.  Since the U.S. economy is made up mostly of consumption (70 percent of GDP), a collective drop of only 5 percent in consumer consumption is sufficient to reduce GDP to negative territory.  Three consecutive months of negative GDP would constitute a recession.

About The Money Anxiety Index

The Money Anxiety Index is an early-warning system of shifts in the economy.   The 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.  The Money Anxiety Index was developed by Dr. Dan Geller, a behavioral economist and the author of Money Anxiety.

The Money Anxiety Index measures the level of consumers' financial worry and stress based on their spending and savings levels. 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.


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<![CDATA[ The U.S. Economy Refuses to Take Off So Far This Year ]]>Sun, 08 May 2016 21:44:11 GMThttp://moneyanxiety.com/1/post/2016/05/-the-us-economy-refuses-to-take-off-so-far-this-year.htmlPicture
The May preliminary Money Anxiety Index at 64.0 is the same as the previous month, and is reflected in the weak jobs report for April showing the U.S. economy added only 160,000 non-farm jobs.  In the first quarter of this year, the Money Anxiety Index increased 1.2 points as consumers reduce spending pushing down real GDP growth to only 0.5 percent annualized. 

So far this year, consumers are exhibiting higher level of money anxiety resulting from economic uncertainty and lack of confidence in a sustained economic recovery.  In January of 2016, the Money Anxiety Index stood at 62.8 climbing up to 64.0 in March and remaining there since. 

The elevated level of money anxiety is causing consumers to reduce spending and put more money in savings.  This is a normal reaction to economic and financial uncertainty rooted in our mechanism for self preservation.  The decrease in consumer spending directly impacts GDP as 70 percent of it is made up from personal consumption. 

Should the current level of money anxiety persist in June; it is very likely that the job market and GDP will continue to show weak results, which would lower the odds of a Fed hike in June.  Moreover, if the Money Anxiety Index continues to increase the probability of a looming recession increases dramatically.

The Money Anxiety Index is an early-warning system to shifts in the economy.   The 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.  The Money Anxiety Index was developed by Dr. Dan Geller, a behavioral economist and the author of Money Anxiety.

The Money Anxiety Index measures the level of consumers' financial worry and stress based on their spending and savings levels. 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.


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<![CDATA[More Savings is Hurting U.S. Economic Growth]]>Thu, 28 Apr 2016 16:43:50 GMThttp://moneyanxiety.com/1/post/2016/04/more-savings-is-hurting-us-economic-growth.htmlPicture
Two of three Americans now prefer savings to spending based on latest Gallup poll.  Bank and credit union savings is now at a record high of over $12 trillion.

The latest Gallup poll shows that nearly two in three Americans now prefer saving money more than spending it. This is the highest percentage yet measured (65%) of consumers who prefer savings to spending based on the April 6-10 Gallup Economy and Personal Finance poll.

The increase in savings sentiment is showing up in the latest retail sales and in the first quarter 2016 Gross Domestic Product (GDP) figures. March retail sales were down 0.3 percent, and GDP for the first quarter of this year is up only 0.5 on an annualized basis according to the U.S. Department of Commerce.

Spending, or personal consumption, is the pillar of the U.S. economy as it makes up about 70 percent of GDP.  When consumers shift more of their disposable income from spending to savings, the U.S. economy is at a risk of slowing down.  Merely 5 percent reduction in personal consumption is enough to push the U.S. into a recession.

One of the main drivers of the shift towards greater savings is money anxiety due to economic and financial uncertainty.  In March, the Money Anxiety Index increased by 1.3 index points to 64.0 reflecting higher level of financial stress and anxiety among consumers.  The elevated level of money anxiety caused consumers to default to their instinctive reaction to reduce spending and put more money in savings.  This is a normal reaction to economic and financial uncertainty rooted in our mechanism for self preservation. 

The Money Anxiety Index is an early-warning system to shifts in the economy.   The 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.  The Money Anxiety Index was developed by Dr. Dan Geller, a behavioral economist and the author of Money Anxiety.

The Money Anxiety Index measures the level of consumers' financial worry and stress based on their spending and savings levels. 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.








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