SAN FRANCISCO–Marching in step with economic and unemployment numbers, the October Money Anxiety Index decreased to 43.0, the lowest level since November 1968.
Consumers feel more confident about the economy than they did in the past 50 years, noted Dr. Dan Geller, who publishes the Money Anxiety Index.
Geller reminded that the elevated level of financial confidence is evident in the second quarter GDP of 4.2%, of which 70% is consumer consumption.
During the past 50 years, the Money Anxiety Index climbed up and down through six recessions. The highest level the Money Anxiety Index ever reached in the past 50 years was during the recession of 1980-1982, when the index peaked at a level of 135.3 – a record high for the index, Geller said.
“The Money Anxiety Index is inverse to consumer confidence indices, meaning that higher money anxiety is the equivalent to lower consumer confidence,” said Geller in a statement. “The Money Anxiety Index is an objective reflection of financial confidence. It measures what people actually do with their money rather than what they say in response to surveys.”
According to Geller, the Money Anxiety Index is highly predictive. Prior to the Great Recession, the index showed how peoples' money anxiety was trending upwards starting in October of 2006; nearly 14 months before the official start of the Great Recession in December of 2007.
The index went as high as 100.4 in the aftermath of the Great Recession, and has declined gradually to 45.4 this August. 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, said Geller, who runs the research firm Analyticom.