As Economy Slows, Financial Anxiety Rises
Consumer financial anxiety increased for the second consecutive month in June.
The Money Anxiety Index, which measures the level of consumers’ financial worry and stress based on economic indicators, rose 0.4 in June to 91.1. Prior to April, the index was trending downwards since its post-recession peak 0f 99.5 in June 2011.
Money Anxiety Index attributed the increased anxiety to an economic “perfect storm” in the U.S brought by a handful of adverse economic conditions. The impact of the cash infusion through Quantitative Easing 1 and 2 is wearing off, as evident from the disappointing job-creation numbers in April and May, 77,000 and 69,000 respectively, which indicates that the U.S. economy can’t create enough jobs to sustain growth.
Additionally, first quarter GDP growth of 1.9, compared with 3.0 GDP growth in the fourth quarter, indicates a slowdown in the U.S. economy. Finally, the looming tax increase, or expiring tax cuts, at the end of the year are impacting consumer spending and business investments.
“Even without external factors, such as the sovereign-debt crisis in the Euro Zone, the U.S. economy is going to deteriorate between now and the end of the year” said Dan Geller, the chief research officer at Money Anxiety Index, “expect to see less job creation, slowdown in consumer spending, and above all, gradual increase in consumers’ level of financial anxiety.”
The Money Anxiety Index, which is based in San Francisco, measures economic indicators and factors associated with consumers’ level of financial worry and stress. The index, which measured the level of financial anxiety for the past 50 years, fluctuated from a high of 136.0 during the early 1980s recession, and a low of 40.3 in the mid-1960s.