Though unemployment remains above prerecession levels, Americans are staying upbeat and have kept Bankrate’s Financial Security Index in positive territory for an unprecedented five straight months. The index fell slightly to 102 in July, but that was after surging to a record high of 102.7 in June, and any reading above 100 indicates good feelings about financial security.
Bankrate’s Financial Security Index gauges how Americans feel today versus a year ago on vital financial matters. An index value of less than 100 indicates declining levels of financial security; a value greater than 100 reveals higher levels of security compared to 12 months ago.
The readings from the last few months mark a big turnaround, says Greg McBride, CFA, senior financial analyst for Bankrate.
“We’ve now had five months in a row where people have said their financial security has improved relative to a year ago,” McBride says, adding that in the history of the index, going back to late 2010, Bankrate had previously seen no more than two consecutive months of improvement.
Increased optimism is also more broad-based than before. While Americans earning more than $75,000 per year had long reported improving financial conditions, that sense of economic well-being is now filtering down into the middle class earning $50,000 to $75,000 per year, McBride says. In that group, 87 percent reported that their overall financial situation was the same or better, versus just 13 percent who said it was worse.
Overall, the numbers of people feeling better off outnumbered those feeling worse off in four of the five areas surveyed for the index, including net worth, job security, debt and overall financial situation.
The only area where Americans haven’t shown substantial improvement involves their level of savings.
That has always been the weakest link in financial security, McBride says. “That continues to be the case. In the two and a half years we’ve been doing this poll, people have, month in and month out, pointed to savings as a real sore spot.”