The Money Anxiety Index dropped to 86.1, the lowest level of consumer financial anxiety in the past three and a half years, and is likely to impact the outcome of the elections and the holiday shopping season. The October preliminary Money Anxiety Index stands at 86.1, which is the same as September and the lowest level of consumer financial anxiety since May of 2009. A substantial improvement in the level of consumer financial anxiety was recorded in the September Money Anxiety Index, which was revised from 92.4 to 86.1 after the government revised the employment figure up by 873,000 household jobs. However, the drop in the unemployment rate consists mostly of an increase in part-time and self-employed workers.
The improvement in the level of consumer financial anxiety in September and October could have ramifications on two important events coming up in the next three months. The first is the presidential elections, and the second is the holiday shopping season. Historically, an incumbent president running for reelection won a second term when the Money Anxiety Index in November was lower than it was in January of the election year. In January of this year, the Money Anxiety Index stood at 90.9, and is projected to stand at 86.1 in October. If the Money Anxiety Index will remain under 90.9 in November, President Obama’s reelection odds are very good.
The lower level of financial anxiety in September and October is also likely to have a positive impact on consumer spending during the holiday shopping season. The slight increase in consumer personal expenditures of 0.4 percent in August is the highest monthly increase thus far this year. Historically, lower level of consumer financial anxiety produced higher level of personal spending, which means that if that if the Money Anxiety Index will remain at its current level of 86.1 or lower until the end of this year, retailers are likely to have a better holiday shopping season than last year.
“August was a tipping point in consumer financial anxiety” said Dan Geller, Ph.D. Chief Research Officer at Money Anxiety Index, “the September and October Money Anxiety Index indicates a reversal of increasing level of financial anxiety which lasted from April to July of this year.”