August 29, 2012

Investor, Consumer Confidence Hit Lows in August

Still, both groups remain more upbeat about their financial situation and the markets, say Spectrem, Conference Board

Spectrem Group said late Tuesday that its Millionaire Investor Confidence Index hit -8, a 10-month low, for August, though the group’s broader Affluent Investor Confidence Index stayed unchanged at -10.

Meanwhile, confidence among U.S. consumers fell by the most in 10 months in August over pessimism about job prospects and the economic outlook, according to the Conference Board, dropping to 60.6 from a revised 65.4 in July. The 4.8-point decline was the biggest since October, and this month’s confidence reading was the lowest since November, when it was 55.2.

But the consumer poll and Spectrem's investor polls both showed bright spots.

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"Consumers were more apprehensive about business and employment prospects, but more optimistic about their financial prospects despite rising inflation expectations," said Lynn Franco, director of economic indicators at The Conference Board in New York, in a press release. The proportion of consumers expecting an increase in their incomes improved to 15.7% from 14.2% in August.

Plus, those claiming business conditions are "good" improved to 15.2% from 13.7%, while those saying business conditions are "bad" was unchanged at 34.4%. Still, the percentage of consumers expecting business conditions to improve over the next six months declined to 16.5% from 19.0%, while those anticipating business conditions will worsen increased to 17.7% from 15.1%.

While affluent and millionaire investor confidence fell, both groups did report more "confidence in the economy" than in July, George H. Walper Jr., President of Spectrem Group, said in a statement. Affluent households, defined by Spectrem as those with at least $500,000 in net worth, were more active in the stock market in August than in July, Spectrem notes, though they tended to favor more conservative investments, such as cash or bond mutual funds.

That survey also found the political environment to be the most important factor affecting economic outlook among the affluent. With the election just over two months away, these investors are very concerned about how partisan gridlock impacts the nation’s economic recovery.

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