The CBA/AOL Finance Optimism Index measures Americans’ level of optimism about their personal finances. The index tracks across four important variables: optimism about personal financial future, worry about current finances, whether news about personal finances has been positive, and worry about how the economy and politics affect personal finances. The index is measured continuously, and results are published on a monthly basis.
In the first month of the index, October 2013, the level of financial optimism was very low as Americans encountered the government shutdown. The value of the index was -24.6, impacted by news of political gridlock and the resulting worry about how the current political and economic situation would affect personal finances.
As the country emerged from the shutdown in November 2013, the index increased considerably, rising by 16 points to -8.8. Financial optimism rose as news of the shutdown died down and Americans became less worried about how the political situation would affect personal finances. In December 2013, the index was relatively flat at -7.8.
At the start of the new year in January 2014, the index increased to +4.0, the first time the index has been positive and an increase of 12 points from the prior month. The increase in the index was driven by Americans seeing more positive news about personal finances, potentially marking the impact of rising stock prices and a decline in the unemployment rate.
In February 2014, the index declined to -2.6, a drop of 6.6. The decrease in financial optimism was mainly driven by a perception that news about Americans’ personal finances wasn’t as positive. Possible factors include the slow start to the month in the stock market and rising prices for gasoline.
In March 2014, the index dropped for the second month in a row to -6.2, a decline of 3.6. This came as a result of Americans becoming more concerned about their current personal financial situation. With the impending Federal Income Tax filing deadline in April, consumers were likely taking stock of their financial situation and potentially facing a looming tax bill. In April 2014, the index increased slightly to -4.8. In May 2014, the index again creeped upward to -4.0 as the stock market saw gains and May jobless claims were at their lowest since 2007.
In June 2014, the index moved into positive territory for the first time since January. The index rose 7.8 points to +3.8, almost matching the highest value of the index since launch. More Americans viewed news about their finances as positive, and optimism about Americans' personal financial future is at an all-time high. Continued increases in the stock market and employment gains likely contributed to the increase in Americans' optimism about their personal finances.
In July 2014, the index declined back to a negative level. The index dropped 6.8 points to -3.0 as the stock market weakened in the last week of the month and news of instability and unrest in the world impacted American optimism. A lower percentage of people thought that news about American's finances had been positive, likely due to events in the Ukraine, Middle East, and Africa.
In August 2014, the index dropped again to -7.0, a decline of -4.0. All 4 components of the index, from economic news to perception of current and future finances, turned slightly more pessimistic. The continued unrest in world news and the threat of war in the Middle East might have contributed to the decrease in Americans' optimism.
In September 2014, the index rose to +4.1, an increase of 11.1 and the highest measured level of the index to date. Optimistic responses for each of the four component questions of the index increased, with significantly less worry about current financial situation and worry that the current economic and political situation will affect personal finances. Potential drivers of this large increase in optimism could include declining gas prices, low unemployment levels, and a strong stock market through the first half of the month.