Politically Divided Federal Gov't Worries U.S. Investors
Economy

Politically Divided Federal Gov't Worries U.S. Investors

by Dennis Jacobe, Chief Economist

Investors feel a lack of control in their ability to build their retirement savings

PRINCETON, NJ -- American investors are most likely to say a politically divided federal government (73%) is hurting the U.S. investment climate "a lot," according to a Wells Fargo/Gallup Investor and Retirement Optimism Index survey. The federal budget deficit (66%) and the unemployment rate (62%) are also among the issues investors are most likely to say are hurting the U.S. investment climate. Investors are least likely to list the availability of credit as a problem from the eight items tested.

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Although a similar percentage of investors said a politically divided federal government was hurting the U.S. investment climate a lot in the September 2011 survey, the issue then placed fourth -- behind unemployment (83%), the federal budget deficit (79%), and the job growth rate (75%).

The Wells Fargo/Gallup Investor and Retirement Optimism Index survey, conducted quarterly, defines investors as those having $10,000 or more of investable assets.

Investors Feel a Lack of Control Over Their Investments

The majority of investors (58%) say they feel little to no control in their efforts to build and maintain their retirement savings in the current environment, down from 65% six months ago. Twenty-nine percent say they have quite a lot of control, and 13% say they have a great deal of control. Separately, 31% say their ability to influence or impact their investments has decreased over the past six months.

Among those investors who feel their control has decreased, large majorities say unemployment and a weak economy, extreme volatility on Wall Street, a lack of national leadership, and the confrontational political stalemate in the nation's capital are all "major factors."

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Investors Feel Financially Better Off

Despite their concerns about the government's impact on the current investment climate, investors are optimistic about their current financial situation as well as prospects for their children. When asked to compare their financial position today to that of more than three years ago -- prior to the last presidential election -- 40% say their financial position is much better (13%) or somewhat better (27%). Another 27% say that their position is worse, with 19% saying "somewhat worse" and 8% saying "much worse." Thirty-two percent say their position is neither better nor worse.

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A majority of investors (57%) think their children will be "better off financially" when their children reach the age they are now, while 41% believe their children will not be better off.

A similar 54% of investors think their children will be better prepared financially for retirement when their children reach the age they are now. Forty-three percent think their children will not be better prepared than they are for retirement.

Implications

Even before the March surge on Wall Street, investor optimism was rising, and many investors were feeling better off financially than they were prior to the last presidential election -- and the worst financial crisis since the Great Depression. Further, investors are expressing optimism about the future finances of their children.

This optimism among investors and their feelings of being financially better off is good news for the future course of the U.S. economy. It may also prove to be good news for the Obama administration.

Still, many American investors continue to feel a lack of control over their ability to influence or impact their efforts to build and maintain their retirement savings. While those who feel their control has decreased are most likely to attribute some of that lack of control to unemployment and a weak economy and Wall Street, they also blame a lack of national leadership and the confrontational political stalemate in the nation's capital. Investors are also most likely to say the politically divided federal government is hurting the current investment climate a lot among the eight potential factors. This does not bode well for the president or for Congress.

Overall, it appears that even as investor optimism increases, investor confidence in the current political situation in Washington and those responsible for it is going in the opposite direction.

Gallup.com reports results from these indexes in daily, weekly, and monthly averages and in Gallup.com stories. Complete trend data are always available to view and export in the following charts:

Daily: Employment, Economic Confidence, Job Creation, Consumer Spending
Weekly: Employment, Economic Confidence, Job Creation, Consumer Spending

Read more about Gallup's economic measures.

View our economic release schedule.

Survey Methods

The Wells Fargo/Gallup Investor and Retirement Optimism Index results are based on questions asked Feb. 3-12, 2012, on the Gallup Daily tracking survey of a random sample of 1,022 U.S. adults having investable assets of $10,000 or more.

For results based on the entire sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±3 percentage points.

Interviews are conducted with respondents on landline telephones and cellular phones, with interviews conducted in Spanish for respondents who are primarily Spanish-speaking. Each sample includes a minimum quota of 400 cell phone respondents and 600 landline respondents per 1,000 national adults, with additional minimum quotas among landline respondents by region. Landline telephone numbers are chosen at random among listed telephone numbers. Cell phone numbers are selected using random-digit-dial methods. Landline respondents are chosen at random within each household on the basis of which member had the most recent birthday.

Samples are weighted by gender, age, race, Hispanic ethnicity, education, region, adults in the household, and phone status (cell phone only/landline only/both, cell phone mostly, and having an unlisted landline number). Demographic weighting targets are based on the March 2011 Current Population Survey figures for the aged 18 and older non-institutionalized population living in U.S. telephone households. All reported margins of sampling error include the computed design effects for weighting and sample design.

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

For more details on Gallup's polling methodology, visit www.gallup.com.

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