The Money Anxiety Index shows signs of consumer concern over the financial and economic conflict with Russia in response to the events in the Ukraine. May's Money Anxiety Index is nearly flat at 74.0 after a substantial improvement in April due to the positive news on the employment front.
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The heightened level of money anxiety among consumers, resulting from the financial conflict with Russia, is already taking its toll on the U.S. economy. Last week, the ten-year U.S. Treasury bonds dropped to 2.54 percent after yielding 3.03 percent at the end of 2013. The decline in long-term borrowing cost is a sign of weakening economy and an attempt to revive the recovery with cheaper money for borrowers. Another aspect of the uneasiness among consumers about the economy is the decrease in mortgage rates. Last week, the average 30-year fixed mortgage rate dropped to 4.17 after reaching a high of 4.54 in December of 2013.
Prior to the financial conflict with Russia, the prospects of accelerating economic recovery in the second half of this year was strong. However, a nearly flat 1st quarter GDP at 0.1 percent, and decreasing long-term interest rates, are increasing the level of money anxiety among consumers and even at the Fed. Last week, during her testimony before Congress, the Fed chairwoman, Janet Yellen, expressed concern about the softening of the economy and signaled that the Fed will keep rates lower for possibly longer than originally projected in order to re-energize the economic recovery.
The Money Anxiety Index measures various economic indicators and factors associated with consumers' level of financial worry and stress. The index is updated in the beginning of each calendar month. It consists of monthly measurement for over 50 years, and spans from January 1959 to date. 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. The 50-year average is 70.7 (July 1980 = 100). The Money Anxiety Index Is highly predictive. It predicted the arrival of the Great Recession over a year prior to the official declaration of the recession in December of 2007.
Money Anxiety is a behavioral finance book showing how financial anxiety impacts consumer financial behavior and the economy. The book demonstrates how we really make our financial decisions, and reveals what truly drives our decisions to save money and to buy products and services. Money Anxiety is available in paperback and eBook formats in all major online booksellers such as Amazon, Barnes and Noble, Google Play and iTunes store. The book is highly beneficial to business and financial people by helping them understnad how and why consumers buy.
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Source: Money Anxiety