Gallup’s Standard of Living Index reached a new high of +50 in December, the best score found in 7 of tracking the index. The Gallup poll matches the Money Anxiety Index showing the lowest level of financial anxiety among consumers in the past 7 years. Seven years ago, in December of 2007, the Money Anxiety Index started climbing up to a high of 97.6 in the aftermath of the Great Recession, and gradually declining to its current level of 65.9.
According to Gallup, Americans’ improved perspective on their personal standard of living comes as they spend more money and begin to view the national economy positively. The increase in consumers’ confidence about the economic recovery lowered their level of money anxiety, which promoted higher spending. When consumers feel less financially anxious, they spend more money because they are more confident about their future ability to earn income as the employment situation improves.
A major factor in the gradual improvement of the Money Anxiety Index is the continued positive news on employment. The December employment figures show that the economy added 252,000 nonfarm jobs, and the unemployment rate dropped to 5.6 percent – the lowest it has been in the past 6 years. The November figures where upwardly revised to 353.000 new jobs.
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 was developed by Dr. Dan Geller, who is an expert in behavioral finance, and the author of the book Money Anxiety. The 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.
