Financing Makes $ense

 Positive Employment Situation Boosts Business and Consumer Financial Confidence in March

The March Money Anxiety Index decreased 2.1 index points from last month to 48.1 and down 38.1 points since the index peaked in the beginning of the pandemic in April of 2020. The decrease in the Money Anxiety Index reflects higher financial confidence stemming from a robust employment market that rose by 431,000 jobs in March.

The Money Anxiety Index is the only financial confidence index that measures actual financial behavior of consumers rather than how they respond to surveys. Since what people say is not always what they actually do with their money, the Money Anxiety Index is the only way to objectively and accurately measure consumers’ financial confidence.

Survey-based financial confidence indices, such as the University of Michigan Consumer Sentiment Index, are based on how people respond to their survey, which is very subjective. If the survey is filled out on a “bad-news day,” it is very likely that the response will be bleak and negative and vice versa. Thus, survey-based indices have a response bias and they do not reflect actual financial confidence.

The Money Anxiety Index is a scientific predictor of financial behavior. It is peer reviewed and published in the Journal of Applied Business and Economics. The index is highly reliable because it measures the level of financial anxiety of people based on what they actually do with their money rather than how they respond to consumer confidence surveys.