July preliminary Money Anxiety Index decreased 0.2 index points to 71.3 indicating an improvement in the level of financial anxiety among consumers. July’s improvement is the forth consecutive month of declining financial anxiety among consumers, who feel more confident about their personal finances and the economy mainly due to meaningful increases in employment in the second quarter of this year.
Employment creation is a significant factor in the level of money anxiety. In the second quarter of this year, the economy added a total of 793,000 non-farm jobs; 288,000 in April, 217,000 in May and 288,000 in June. When job creation increases, consumers feel more secure in their current jobs, or are more encouraged about the prospects of finding a job, which leads to an increase in spending and economic growth.
July’s improvement in the Money Anxiety Index is consistent with a trend that started a year ago. In June of 2013, the Money Anxiety Index reached a high of 90.4 but kept on declining ever since to its current level of 71.3 – a cumulative decrease of 19.1 index points. Although there were bumps along the way, when the Money Anxiety Index increased slightly for one month, the 12-month trend line clearly shows that consumers feel more confident about their personal finances and the economy.