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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.

 


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