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September 24, 2014 at 09:07 AM
Heightened optimism about economic growth and the labor market pushed U.S. investor confidence in the third quarter to its highest level since December 2007, according to a survey released Wednesday.
The Wells Fargo/Gallup Investor and Retirement Optimism Index rose to +46, up 17 points from the second quarter.
Still, the index lags the pre-2008 recession 12-year average of just under +100, Wells Fargo said in a statement.
The quarterly survey measures the perceptions of U.S. investors with $10,000 or more in investable assets. The new results were based on telephone interviews in mid-August with 1,011 investors 18 and older.
Some 40% of households surveyed had at least $10,000 in savings and investments. Twenty-seven percent of respondents were retired. Of total respondents, 58% reported an annual income of less than $90,000 and 42% of $90,000 or more.
‘As If They’ve Hit a Ceiling’
Fifty-six percent of non-retired investors in the survey could not foresee a time when their income would be significantly higher than it was today, compared with 42% who anticipated growth in income.
Non-retirees with $100,000 or more in assets were especially pessimistic about the prospect of earning more: 61% versus 51% of investors with less than $100,000 in assets.
“Investors with higher assets appear to feel as if they’ve hit a ceiling,” Karen Wimbish, director of retail retirement at Wells Fargo, said in a statement. “They have done well, but don’t see opportunity for continued income gains in the future.”
When asked how their finances today compared with five years ago, 34% of respondents said they were doing about the same and 24% said they were doing worse than five years ago, while 42% say they were doing better.
Just 37% said they were saving and investing more money in recent months than they had done before the recession, with the majority saving about the same or less.
These figures were essentially unchanged from two years ago, Wells Fargo said, indicating that investors had been unable to make much financial headway in the economic recovery.
When asked directly about the effect the 2008 recession on their finances, nearly half said they were still feeling the effects of the recession “a lot” or a “fair amount.”
Fifty-one percent of respondents thought the pressure on American families’ ability to save today was due to rising prices caused by inflation, whereas 37% said the pressure came from lack of wage growth or stagnation.
Nine percent of investors said the pressure is caused by a combination of the two factors.
Better Safe Than Sorry
