The level of money anxiety among consumers declined almost consistently in the past 12 months reflecting the improvement in the employment situation. The Money Anxiety Index declined 7.1 since August of 2014 mirroring the decline in the unemployment rate from 6.1 to 5.3 in July of this year.
Financial anxiety has two main factors – current earnings and future prospects of employment and income. The July job report shows improvement in both factors. In addition to the healthy addition of 215,000 nonfarm jobs, the July report also shows an increase of 0.5 percent in hours worked and an increase of 0.2 percent in the average hourly earnings, which is up 2.1 percent in the past 12 months.
The makeup of the job report is also positive. Professional & business services rose the most of any industry category adding 40,000 net new jobs. Education & health services added 37,000 jobs; financial services added 17,000 jobs and manufacturing employment increased by 15,000 jobs. Conversely, lower paying declined slightly and employment in temporary staffing decreased by 8,900 jobs.
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.