Surprise! Americans feeling better about finances
Americans' feelings of financial security are at their highest level in six months, according to Bankrate.com's December Financial Security Index. The overall index gained 3.3 points to 95.8, the highest level since June's 97.8. Every component of the index improved, including job security, savings, debt, net worth and overall financial situation.
Good news, right? I hate to burst your bubble on this one, but here's the real takeaway of the survey: Our moods have improved from the debt ceiling debacle summer (a really low bar), but we're feeling less secure than we were a year ago. Greg McBride, CFA, senior financial analyst for Bankrate.com, noted that "2011 was not a year of progress in terms of consumers' financial security...each component...ended 2011 lower than where it was in January."
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So what does this index really tell us? 2011 has been a volatile year in the financial markets and in the economy and while the mood has improved, it has done so from a very low level. Still, it was good to see that results in the job security category are showing progress, as those feeling less secure than a year ago fell from 28 percent to 18 percent. The improvement jibes with the signs of a thawing labor market, which were seen in the November jobs report and the drop in the unemployment rate to 8.6 percent. Recent data also suggest that more workers are leaving their jobs on a voluntary basis, which suggests a more upbeat outlook on job prospects.
While the index doesn't break out investor sentiment, the pervasive mood among individual investors could best be described as exhausted. To find out why investors are spent, check out this interview that I conducted with the great Charles Osgood on "The Osgood Files".
