Calif. Feb. 7, 2020 - The Money Anxiety Index, which measures the financial
behavior of consumers, increased 1.1 index points in January reflecting a
growing fear from the economic impact of the Coronavirus on the U.S. and
global economy. In November of 2019, the Money Anxiety Index stood at
40.9, rising mildly to 41.0 in December, and rising noticeably to 42.1 in
The biggest threat
to the U.S. economy from a prolonged exposure to the Coronavirus is an
increase in money anxiety, which leads to a reduction in consumer
spending. Since personal consumption makes up 70% of GDP in the U.S.,
a collective drop of only 3% in personal consumption can push the U.S. into
a recession because 70% of 3% would erase the current U.S. GDP of
If the Coronavirus
will continue to spread and impact the U.S. economy in the next 45 days,
the Fed will be forced to cut the funds rate to stimulate the economy and
restore consumer confidence. In its January 28-29 meeting, the Fed decided
to hold the funds rate at t its current range of 1.50%-1.75%.
However, since then, the impact on the U.S. economy has grown especially in
the manufacturing sectors that relay heavily on
supply chain management from China.
January jobs report released today shows a healthy increase of 225,000
non-farm jobs," says Dr. Dan Geller founder of Analyticom, "the real test will come in
February, when the economic impact of the Coronavirus will be reflected in
the employment situation. If disruption in the travel sector and the
delay in supply chain management will continue through February, employers
will be forced to reduce expenses."
Banks and credit
unions are already lowering their deposit rates in anticipation for a Fed
rate cut in March or April. In January, financial institutions lowered
their deposit rates by an average of 1 bps nationally,
and are projected to do the same in February and March according to
a special forecast just released by Analyticom
LLC - a behavioral economics and the producer of the Money Anxiety Index.
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. 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.
About Analyticom LLC
Analyticom LLC is a scientific research firm specializing in the
application of behavioral economics in financial decisions. Dr. Dan
Geller, the founder of Analyticom LLC, is a pioneer in the field of
behavioral economics in financial decisions, and is the co-author of the
study Dynamics of Yield Gravity and the Money Anxiety Index published
in the Journal of Applied Business and Economics. Dr. Geller is a
frequent speaker and media guest. He appeared on national TV and radio,
such as CNBC and Fox, and delivered the keynote address at the American
Banker's Symposium. He is the author of the groundbreaking book on
the impact of Money Anxiety on the economy.