Positive Economic Progress Not Yet Hitting Americans' Pocketbooks
Unemployment is down. Consumer confidence is on the rise and spending is holding steady. Yet Americans aren't feeling these signs of economic recovery where it counts. Despite this upward trajectory, the COUNTRY Financial Security Index® fell 1.7 points from last December to 64.0 in June.
The reading of Americans' overall financial security sentiments has steadily declined since December 2012. The Index is now at its lowest level since October 2011, when the nation was reeling from a credit downgrade, 9 percent unemployment, depressed housing markets and an 1800-point drop in the Dow.
The latest drop was driven by declines in all areas that make up Americans' financial security, with many components at their lowest levels in two or more years.
"It's not surprising Americans are still wary of their financial situation since it usually takes time to feel the effects of positive economic developments. It's normal for the economy and consumer confidence to go through ups and downs within a typical economic cycle," says Troy Frerichs, director, Investments-Wealth Management at COUNTRY Financial. "Despite what's happening in the overall economy, you are in the driver's seat when it comes to your finances. A sound financial plan can help you avoid emotional reactions to outside factors, and will help keep your personal financial situation on course."
The Pre Mid-Life Financial Crisis
Gen X (ages 30-49) may be experiencing a pre mid-life financial crisis - they are more pessimistic about their overall financial situation than any other age group. Forty-four percent of 30-39 year olds and 34 percent of 40-49 year olds rate their overall level of financial security positively. These are down five and four points from December, respectively. Further:
Just 44 percent of those ages 40-49 were able to set aside money this month, down seven points from December.
Also down seven points to 59 percent were those confident in their ability to fund their children's college education.
Forty-somethings may also be struggling to handle their financial obligations, as there was a nine-point plunge to 68 percent in those confident in their ability to pay all debts as they come due.
Nature vs. Insure
Of the factors comprising Americans' financial security, confidence in the ability to adequately protect house, car and other possessions took the biggest plunge, down four points from December to 76 percent hitting its lowest level since the inception of the Index in 2007. A rise in claims due to a harsh winter and recent natural disasters may be contributing to Americans' pessimism.
"Although you cannot plan for Mother Nature, going over your individual insurance needs with a professional is key," continues Frerichs. "It's important to focus on what's in your control and arm yourself financially for whatever may come."
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