PhotoAre happy days here again? New research from finds consumers' feelings of financial security improved markedly over the past month, thanks to new stock market highs and continued job growth.

Bankrate's March Financial Security Index reading of 101.5 is the highest since the monthly polls began in December 2010. The 4.7-point jump from February's 96.8 is the second-biggest monthly gain in the Index's history (after a five-point gain from April 2011 to May 2011). This is only the third time in the past 28 months that consumers are feeling better about their financial security versus 12 months prior.

A non-starter

Bankrate found that more than half of working Americans either haven't noticed (48%) or have been unaffected (7%) by the January 1 expiration of the payroll tax cut. Another 30% have cut their spending as a result, 8% are putting less money into savings and 3% have scaled back retirement contributions.

"What is shocking is that the lowest-income households were the least likely to have cut back on spending and the most likely not to have noticed the change in the payroll tax," said Greg McBride, CFA,'s senior financial analyst. "These results contradict the widely held assumption that lower-income households would feel the biggest squeeze from the payroll tax cut expiring."

Surprising result

Those most likely to have cut spending were households with income between $50,000 and $75,000 per year. The same surprising results were evident when evaluating on the basis of educational attainment: households headed by college graduates were the most likely to have cut spending, whereas households headed by those with less than a college degree were the most likely not to have noticed the higher payroll tax rate.

Four of the Financial Security Index's five components -- job security, debt, net worth and overall financial situation -- indicate that Americans are better off now than one year ago; savings is the only laggard. All five components improved over the past month.

The survey was conducted by Princeton Survey Research Associates International.

Share your Comments