The attitudes of U.S. investors continued their modest recovery in November from the lows reached following the hurricanes in the Gulf region, according to the latest UBS/Gallup Index of Investor Optimism.
After rebounding in October from a two-and-a-half-year low, the index is now at 50, up three points from October and 16 points from September. More investors than last month consider the economy in an expansion or recovery and moderating gas prices are aiding that recovery, it reports. “Investors reacted positively to the nomination of the new Federal Reserve chief this month but attribute little economic influence to the Fed,” it adds. “Investors were also questioned this month about their likely holiday spending and most predicted they would spend about the same as last year.”
The survey also found that investor evaluations of economic conditions have improved since last month: 40% say the economy is in an expansion or recovery, up seven points from last month; although 59% characterize the economy as in a slowdown or a recession, including 40% who say it will be at least two years before the economy begins to recover.
Another indication of some improvement in the investment climate is that 56% of investors say now is a good time to invest in the financial markets, up five points from last month. In the first quarter of this year, an average of 62% said it was a good time to invest. That dropped to 57% in the second quarter, then fell to 51% in September and October, before recovering this month.
One reason for the more positive perceptions may be the moderation of gas prices. Last month 80% of investors said the price of energy was hurting the investment climate “a lot.” That number is down to 71% this month.
“The economy is clearly in a period of mild recovery as moderating gas prices bring some relief.” said Mike Ryan, head of UBS Wealth Management Research.
The poll finds investors showing little change in their holiday spending plans from two years ago. More investors say they will spend less this year (24%) than last, while 9% expect to spend more. Typically Americans say they will spend less each year than last, and the pattern measured this year is similar to what was measured in 2002 and 2003. 66% say they will spend the same this year as last. The actual projected level of spending this year is an average of $992 per person, down $23 per person measured two years ago, well within the poll’s margin of error. These results suggest overall little change in spending from previous years.
These findings are part of the 92nd Index of Investor Optimism, which was conducted November 1 to November 20. For this study, the American investor is defined as any person who is head of a household or a spouse in any household with total savings and investments of US$10,000 or more. The sampling error in the results is plus or minus four percentage points.
U.S. investor optimism on the upswing: survey
40% say the economy is in expansion or recovery
- By: James Langton
- November 28, 2005 November 28, 2005
- 11:15