In yet another sign of a cautious optimism, Bankrate.com's Financial Security Index rose for a second consecutive month in January.
While people continue to feel less financially secure than they did one year ago, the overall Financial Security Index was 97.3, up from 95.8 in December, and the highest since June's 97.8. Any reading below 100 indicates a lower level of financial security compared with 12 months earlier.
For the first time since May, job security was positive. Twenty percent of Americans said they feel more secure than one year ago and 17 percent said they felt less secure. Also for the first time since July, people reported being more positive about their net worth. Twenty four percent said their net worth was higher than one year ago and 22 percent said their net worth was lower.
"With Americans' feeling on job security turning positive for the first time since May, this is a step toward people eventually becoming more comfortable with big-ticket purchases, such as homes, that is needed to propel the economy forward," says Greg McBride, CFA, Bankrate.com's senior financial analyst.
However, Americans are neutral on debt — 23 percent said they're more comfortable than they were a year ago, and 23 percent said they are less so. By far the problem area is saving. Forty one percent said they were feeling less comfortable about their savings, compared to the 14 percent who are okay with where their savings are.
While there's a glimmer of hope, overall people don't feel like the recession is over. About 28 percent said they are worse than a year ago, and 23 percent said they are better off.
Most notable, only 12 percent of retirees feel their overall financial situation is better now. "This illustrates the plight of savers and those dependent on fixed income in a low rate environment," says McBride.
What does all this portend for the economy? "It will be difficult for the economy to post anything more than slow growth when household incomes are largely flat, but the steady upward creep of household expenses and the lack of return on savings undermines Americans' feelings of financial progress and their ability to ramp up spending," McBride said.
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