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Washington Gridlock Clouds Wealthy Outlook On Economy, PNC Survey Finds

PHILADELPHIA, Oct. 31, 2013 /PRNewswire/ -- The increasingly optimistic mood of America's affluent on the economy darkened in the aftermath of the U.S. government shutdown and near default, according to survey findings by PNC Wealth Management, a member of The PNC Financial Services Group, Inc. (NYSE: PNC).

Nearly half (48 percent) of those surveyed in the immediate aftermath of the near U.S. default in mid-October said they were less optimistic about the U.S. economy than they were before the highly contentious stalemate.

Three quarters (76 percent) said that governing by crisis must change because "the government simply cannot continue to operate this way." Only four percent responded that "things are going to get better."

In addition, 62 percent believe the events of the last few weeks will negatively impact the economy in both the short and longer terms.

However, despite the gridlock, 52 percent say they will not change the way they invest in the next six months, while 47 percent say they will be more cautious.

"We consistently advise our clients to add equity exposure when uncertainty is high and to reduce exposure when confidence is extremely high," said Thomas P. Melcher, executive vice president and managing director of Hawthorn, the family office unit of PNC Wealth Management. "We can clearly see from the survey that investor confidence was hurt by the shutdown, but we also see increased sophistication as evidenced by their intention to stay the course."

Prior to the government shutdown PNC's survey results showed that wealthy investors' outlook was mostly on the rise, with 32 percent saying they were "very or somewhat optimistic" about the state of the U.S. economy-- an improvement from 28 percent the previous year and from 10 percent two years ago.

Despite continuing sluggishness in the economy, strong market performance has contributed to a healthy increase in net worth. More than two-thirds (68 percent) said that their net worth has increased by 20 percent or more in the last five years, up from 52 percent in 2012, while 12 percent said their wealth increased by 50 percent or more.

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