Overall U.S. investor optimism has plummeted to -8, down from +16 recorded in July and +24 in May according to the quarterly Wells Fargo/Gallup Investor and Retirement Optimism Index conducted November 9-17, 2012. The dip in sentiment is comparable to the -9 index recorded in November 2011, and is linked to pessimism about the overall economy. More than half (59%) say now “is not a good time” to invest in the markets, an increase from 48% recorded in May. Sixty-eight percent say they have “little to no” confidence in the stock market as “a place to invest for retirement.”
Among a list of eight factors, 69% of investors ranked the deficit and divided government as the top factors “hurting” the investing climate “a lot,” followed by unemployment (67%) and the global economic slowdown (63%).
Seventy-two percent of investors say it is “somewhat likely” to “very likely” that the automatic tax increases and spending cuts of the “fiscal cliff” will be pushed out six to 12 months to give the President and Congress more time to negotiate. Seventy percent say the country will go into recession in 2013 if “fiscal cliff” issues are not resolved. Over half of investors (54%) say the outcome of the Presidential and Congressional elections have made it “more difficult” to save for retirement.
“No question about the fact there is a gloomy sentiment among investors right now, and it looks like it’s connected to a belief that the elections will result in more Washington gridlock. The fact that 80% of investors say we need a national effort in place to encourage Americans to save is eye opening. Clearly, people want to feel like they have the wind at their backs and the tools to increase savings,” said Joe Ready, director of Institutional Retirement and Trust at Wells Fargo.