Three in five American investors say they are optimistic about economic growth, stock market performance and unemployment over the next year, Wells Fargo reported Tuesday.
However, they are less positive about inflation, with only 40% at least somewhat optimistic and 34% at least somewhat pessimistic.
Investors are most positive about maintaining their household income over the 12 months and about reaching their five-year investing goals, with 71% saying they are at least somewhat optimistic about each.
“Over the course of this bull market since the recession, there have been periods of volatility,” Joe Ready, head of Wells Fargo Institutional Retirement and Trust, said in a statement. “But people seem to brush it off and stay the course, knowing it will help them in the long run in retirement. This type of investment discipline is an important part of an overall financial plan.”
The findings are part of the Wells Fargo/Gallup Investor and Retirement Optimism Index, conducted by telephone in February among 1,321 adult investors in households with total savings and investments of $10,000 or more. The sample was made up of 71% non-retirees and 29% retirees.
Wells Fargo said interviewing began a week after the release of January’s solid labor report, but also after a major sell-off on Wall Street, when the Dow Jones industrial average dropped below 24,000. By the time of the survey, the market was already starting to recover.
The index is an enhanced version of Gallup’s Index of Investor Optimism, which provides the historical trend data.
The Wells Fargo/Gallup Investor and Retirement Optimism Index stood at a 17-year high of +139 in the first quarter, up from +126 a year ago. The index last exceeded the current level in September 2000, when it was +147.
The survey found that 52% of investors were, at most, only mildly concerned about recent stock market volatility.
Forty-five percent were less sanguine — though below the 53% who expressed concern after stock market volatility in 2015 and 64% in 2016.
Fifty-three percent of female investors in the poll said they were very or somewhat worried about recent volatility, compared with 38% of their male counterparts.
Notwithstanding recent market swings, 60% of respondents said now was a good time to invest in the financial markets, the same as a year ago and higher than the average 51% recorded on this measure since September 2011 when this measure plummeted to 35%, according to Wells Fargo.
In addition, 49% of investors said they had considerable confidence in the market as a place to save and invest for retirement, up from 36% in February 2016. Asked to respond to a specific example, 53% said they could tolerate a market correction of 10% or more over the course of a year on a $10,000 investment.
“Taken together, these and other findings from the survey show many investors are optimistic about the future, yet realistic about any near-term challenges they may face in the current economic environment,” Ready said.
Effects of New Tax Law
The February survey turned up divisions among investors about how new changes to personal and corporate income taxes may affect various sectors of the economy.
Thirty-five percent said the changes to federal personal income taxes would be mostly good for them, while 13% said they would be mostly bad. The rest said they would not make a difference, or were unsure.
Forty-two percent of investors earning $90,000 or more expected the effect of the changes to be mostly good versus 14% who said it would be mostly bad. By contrast, 29% of those making less than $90,000 said the changes would be good for them, and 15% said they would be mostly bad.
Investors were also divided on whether the changes would be good or bad for the country as a whole: 36% said mostly good, and 25% said mostly bad. Slightly more said the new income tax law will be mostly good for the stock market and for job creation.