- Gallup Investor Optimism Index sinks to new low of the year
- Investors’ outlook for the economy, including inflation, has turned negative
- Investors oppose proposal for IRS to monitor most U.S. bank accounts
WASHINGTON, D.C. — Investors’ outlook for the U.S. investing climate has worsened in the second half of the year as their levels of optimism about economic growth, unemployment and inflation all have dimmed. At the same time, their levels of optimism about the stock market and reaching their investing goals remain steady at fairly positive levels.
The overall effect is a decline in the Gallup Investor Optimism Index from +39 in the prior survey (conducted in the second quarter) to +10 in the fourth.
Line graph. Trend in Investor and Retirement Optimism Index from October 1996 to May 2020. Index peaked at +152 in January 2000 and reached its lowest, -81, in February 2009. After hitting a 20-year high of +138 in January 2020, the index fell to +4 in May 2020 and is now +10.
The latest drop in investor optimism, based on a Nov. 1-7 survey, puts the index close to its lowest point of the pandemic so far — a +4 in the second quarter of 2020. Before that, the index had not been this low since 2014.
The Gallup Investor Optimism Index is a composite of investors’ ratings of four aspects of the economy and three aspects of their personal finances and investments. Since its inception in 1996, the index has ranged from +152 (in January 2000) to -81 (in February 2009). Investors, for this survey, are defined as adults with $10,000 or more in stocks, bonds or mutual funds, either within or outside of retirement accounts.
Investors Sour Further on Inflation While Stock Market Outlook Steady
Investors’ net optimism — the percentage optimistic minus the percentage pessimistic — has fallen sharply since June on three components of the index: economic growth, unemployment and inflation. Attitudes are now more negative than positive on these three aspects of the index. At the same time, investors’ outlook for the stock market has been stable at a relatively positive +22, similar to its level over the past year.
After successive drops in optimism about inflation, that score is now deeply negative at -60, whereas optimism about unemployment is -13 and economic growth is -4. Investors’ current sentiment about inflation is more negative than their view of unemployment was at the start of the pandemic, when that net optimism score plunged more than 80 points to -35.
Line graph. Trend from Q4-2018 to Q4-2021 in U.S. investors outlook for four aspects of the economy — economic growth, unemployment, the stock market and inflation. Figures shown are net optimism score, which is the percentage optimistic minus pessimistic about the effect each dimension will have on the overall investment climate for the next 12 …….