Most economists will agree that last year started at least with great promise. The first quarter of 2002 inspired some economic hope among American investors. The Gallup/UBS Index of Investor Optimism -- U.S.* rose in the first quarter of 2002, showing gains along both its component dimensions: the Personal Dimension, which gauges investors' optimism about their own financial situation and prospects, and the Economic Dimension, which includes investor evaluations of economic growth, unemployment, the stock market, inflation and interest rates. But by the end of 2002, these trends were at or near all-time lows. Examining the data on a regional basis** gives more insight into just how bad things were in different areas of the country.
Eastern Region
When it comes to investors, the least optimistic region in America at the end of last year was the East. Overall, the Index started the year at a promising 110 among investors living in this region, but fell to 83 in the second quarter, 44 in the third, and finally dropped to a mere 17 in the fourth quarter -- a total decline of 93 points.
The Personal Dimension in the East started 2002 at 80, then slid from 66 in the second quarter, to 41 in the third, to 33 in the fourth. The Economic Dimension started 2002 at 30, then slid to 17 in the second quarter, 3 in the third, and finally to a dismal -16 by the fourth quarter. Over the course of 2002, the Personal Dimension showed a 47-point drop, and the Economic Dimension dropped 46 points.
Midwestern Region
Like those in the East, investors in the Midwest started 2002 in a relatively better mood. Their overall Index was at 105 in the first quarter. By the second, it had slipped to 77, then to 56, and finally landed at 33 in the fourth quarter. The overall Index declined 72 points in the Midwest in 2002 -- a big drop, but not as big as the 93-point drop in the East.
The Personal Dimension started 2002 at 75 in the Midwest. It had dropped to 48 by the third quarter, but held fairly steady in the fourth at 41. The Economic Dimension was at 30 in the first quarter, and it declined gradually over the second and third quarters (from 16 to 7). Not until the fourth quarter did economic optimism fall sharply, to -17. So, over the course of the year, the Personal Dimension dropped 34 points while the Economic Dimension fell 47 points.
Western Region
Compared to Easterners and Midwesterners, Western investors were slightly more optimistic as 2002 came to a close -- or perhaps simply less pessimistic. In any case, among Western investors each dimension showed an arrested decline in optimism between the third and fourth quarters of 2002.
The Personal Dimension in the West started 2002 at 77, and gradually lost steam -- slipping to 63, then to 49, and finishing in the fourth quarter at 41. The total loss was 32 points. The Economic Dimension began 2002 at 32, then dropped to 18 and then to -6. It stayed relatively steady at -4 in the fourth quarter. On the bright side, the Economic Dimension only dropped 36 points in 2002 -- a modest loss compared to those in the East and Midwest.
Southern Region
The investors who best kept the faith last year were those in the South -- at least their optimism level seemed to plateau at the end of 2002.
Both the Personal and Economic Dimensions stayed relatively high. Personal investor optimism went from 80 to 68 to 54, then held steady at 56 in the fourth quarter. The net loss along the Personal Dimension was 24 points. The Economic Dimension declined in the South, but not as sharply as in the rest of the country. The Economic Dimension was at 32 in the first quarter and had dropped to 9 by the third, but rebounded to 13 in the fourth. In fact, the Economic Dimension lost only 19 points among Southern investors in 2002.
*Results for the Gallup/UBS Index of Investor Optimism -- U.S. are based on monthly interviews with about 1,000 U.S. investors, aged 18 and older. For results based on each of these samples, one can say with 95% confidence that the maximum error attributable to sampling and other random effects is ±3%. 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.
**Gallup identifies these states as "East": Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, Maryland, Delaware, West Virginia, and the District of Columbia
Gallup identifies these states as "West": Montana, Arizona, Colorado, Idaho, Wyoming, Utah, Nevada, New Mexico, California, Oregon, and Washington
Gallup identifies these states as "South": Virginia, North Carolina, South Carolina, Georgia, Florida, Kentucky, Tennessee, Alabama, Mississippi, Arkansas, Louisiana, Oklahoma, and Texas
Gallup identifies these states as "Midwest": Ohio, Michigan, Indiana, Illinois, Wisconsin, Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska, and Kansas
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