GALLUP NEWS SERVICE
PRINCETON, NJ – In the wake of last month's tragic events, any doubts economic policy makers seemed to have had about the need to stimulate the U.S. economy suddenly disappeared. The Fed (Federal Reserve Board of Governors) reduced interest rates and clearly indicated it would provide whatever monetary stimulus the economy needed to start growing again. At the same time, the president and Congress decided to adopt a stimulative fiscal policy. Although they still need to decide on the final composition of the new stimulus package, there is no doubt that substantial new federal dollars will be spent.
While it is not clear at this point how effective these measures might be, investors seem to have taken heart. In October, the overall Index of Investor Optimism increased 67 points and now stands at 130. The Index had dropped to 63 in September, continuing the decline begun last March. The Index is now at its highest point since March when it stood at 137.
| INDEX OF INVESTOR OPTIMISM October 1996 to October 2001 |
 |
Importantly, the index has increased along all its dimensions. The personal dimension increased 17 points in October and is now at 93. This is the highest point for this dimension since May when it stood at 94. The economic dimension is currently at 22, an increase of 24 points since September. It is now at its highest point since January of this year, when it stood at 24. The governmental dimension is at 15, up 26 points over last month and the highest since March, when it stood at 27.
While the overall Index is currently much higher than it has been for most of 2001, it remains far below the level it was a year ago. In October of 2000, the overall Index stood at 150 -- 20 points above its current level. Similarly, the personal dimension was at 102 – nine points above today's level while the economic dimension was at 44 – 22 points above its October level. Only the governmental dimension is higher now than it was a year ago, from a level of four last year to 15 now. Gallup has seen all of its measures of confidence in government go up significantly since September 11th.
Investors Say It Is a Good Time to Invest
As noted earlier, one reason investor optimism has increased may be their more positive perceptions of the government's monetary policies. In October, 89% of investors offering an opinion approved of the Fed's policies, an all-time high.
Another reason for increased optimism may be that investors have decided to look past the current situation to focus on where they think the economy will be a year from now. The current situation, of course, has been negatively impacted by recent events, and many investors have taken note. More than one out of four (27%) say that the terrorist attacks have had an 'extremely' (9%) or 'very' serious (18%) impact on their investments, and another 39% say that the attacks have had a 'moderately' serious impact. Further, 86% of investors say the United States is in an economic slowdown (59%) or recession (27%).
Despite these assessments of current economic conditions, more than half of all investors (57%) think that the U.S. economy will be on its way to a recovery within the next 12 months – 20% within the next six months and 37% within the next year. An even greater percentage of investors think that the stock market will improve during the next year. Seven out of 10 (71%) think that the stock market will be ‘much higher' (13%) or ‘somewhat higher' (58%) a year from now. Furthermore, almost three in ten investors (28%) think the stock market is undervalued – the highest percentage of investors holding this view since this question was first asked in June of 1998.
Given these perceptions, it is not surprising that three out of four investors (73%) think now is a good time to invest in the financial markets, the highest percentage expressing this view since September 2000, when 75% said it was a good time to invest.
These results show that despite the short-term challenges facing the U.S. economy, most investors expect the economy to be considerably better a year from now. Consistent with this view, three of four investors (74%) believe the U.S. can have a full economic recovery and still fight the war against terrorism.
Survey Methods
Results for the Gallup/UBS PaineWebber "Index of Investor Optimism" Poll are based on telephone interviews with a randomly selected national sample of 1,004 adult investors, 18 years and older, with at least $10,000 of investable assets, conducted October 1-14, 2001. For results based on this sample, one can say with 95 percent confidence that the maximum error attributable to sampling and other random effects is plus or minus 3 percentage points.
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.
|
INDEX OF INVESTOR OPTIMISM |
||||
|
OVERALL |
PERSONAL |
ECONOMIC |
GOVERNMENTAL |
|
|
'01 October |
130 |
93 |
22 |
15 |
|
'01 September |
63 |
76 |
-2 |
-11 |
|
'01 August |
86 |
88 |
11 |
-13 |
|
'01 July |
82 |
81 |
15 |
-14 |
|
'01 June |
104 |
91 |
17 |
-4 |
|
'01 May |
113 |
94 |
21 |
-2 |
|
'01 April |
116 |
92 |
16 |
8 |
|
'01 March |
137 |
92 |
18 |
27 |
|
'01 February |
126 |
89 |
15 |
22 |
|
'01 January |
130 |
98 |
24 |
8 |
|
'00 December |
118 |
101 |
24 |
-7 |
|
'00 November |
156 |
105 |
41 |
10 |
|
'00 October |
150 |
102 |
44 |
4 |
|
'00 September |
157 |
104 |
56 |
-3 |
|
'00 August |
174 |
115 |
59 |
* |
|
'00 July |
140 |
111 |
46 |
-17 |
|
'00 June |
141 |
114 |
44 |
-17 |
|
'00 May |
154 |
114 |
50 |
-10 |
|
'00 April |
141 |
108 |
44 |
-11 |
|
'00 March |
151 |
109 |
51 |
-9 |
|
'00 February |
178 |
113 |
67 |
-2 |
|
'00 January |
181 |
114 |
75 |
-8 |
|
'99 December |
167 |
116 |
74 |
-23 |
|
'99 November |
132 |
103 |
55 |
-26 |
|
'99 October |
130 |
103 |
49 |
-22 |
|
'99 September |
144 |
112 |
57 |
-25 |
|
'99 August |
145 |
110 |
51 |
-16 |
|
'99 July |
171 |
115 |
65 |
-9 |
|
'99 June |
131 |
100 |
59 |
-28 |
|
'99 May |
156 |
110 |
68 |
-22 |
|
'99 April |
165 |
114 |
71 |
-20 |
|
'99 March |
145 |
108 |
57 |
-20 |
|
'99 February |
184 |
110 |
76 |
-2 |
|
'98 December |
147 |
108 |
56 |
-17 |
|
'98 September |
158 |
104 |
63 |
-9 |
|
'98 June |
162 |
105 |
71 |
-14 |
|
'98 March |
171 |
104 |
73 |
-6 |
|
'97 December |
126 |
103 |
62 |
- 39 |
|
'97 September |
141 |
101 |
62 |
- 22 |
|
'97 June |
119 |
104 |
57 |
- 42 |
|
'97 February |
87 |
97 |
43 |
- 53 |
|
'96 November |
95 |
99 |
40 |
- 44 |
|
'96 October |
100 |
95 |
41 |
- 36 |
Personal Dimension:
Overall, how optimistic or pessimistic are you that you will be able to achieve your investment targets over the next TWELVE MONTHS?
|
Very opti- |
Somewhat opti- |
Neither opti- |
Somewhat pessi- |
Very |
Don't know/ |
|
|
% |
% |
% |
% |
% |
% |
|
|
01 Oct |
17 |
42 |
18 |
17 |
5 |
1 |
|
01 Sep |
14 |
39 |
16 |
17 |
13 |
1 |
|
01 Aug |
17 |
43 |
15 |
16 |
8 |
1 |
|
01 Jul |
17 |
39 |
15 |
20 |
8 |
1 |
|
01 Jun |
17 |
43 |
15 |
14 |
8 |
3 |
|
01 May |
21 |
40 |
17 |
16 |
6 |
* |
|
01 Apr |
19 |
34 |
18 |
18 |
8 |
3 |
|
01 Mar |
20 |
37 |
19 |
17 |
6 |
1 |
|
01 Feb |
20 |
38 |
22 |
14 |
5 |
1 |
|
01 Jan |
20 |
41 |
20 |
14 |
4 |
1 |
|
00 Dec |
21 |
42 |
19 |
14 |
3 |
1 |
|
00 Nov |
23 |
43 |
16 |
13 |
3 |
2 |
|
00 Oct |
24 |
45 |
18 |
9 |
3 |
1 |
|
00 Sep |
28 |
43 |
15 |
8 |
5 |
1 |
|
00 Aug |
30 |
43 |
17 |
5 |
3 |
2 |
|
00 Jul |
26 |
43 |
17 |
9 |
4 |
1 |
|
00 Jun |
30 |
45 |
15 |
7 |
2 |
1 |
|
00 May |
28 |
44 |
15 |
9 |
3 |
1 |
|
00 Apr |
26 |
44 |
17 |
8 |
4 |
1 |
|
00 Mar |
28 |
46 |
14 |
8 |
4 |
* |
|
00 Feb |
30 |
43 |
13 |
9 |
3 |
2 |
|
00 Jan |
33 |
42 |
14 |
6 |
4 |
1 |
|
99 Dec |
36 |
39 |
11 |
6 |
5 |
3 |
|
99 Nov |
28 |
43 |
17 |
7 |
3 |
2 |
|
99 Oct |
27 |
47 |
13 |
9 |
3 |
1 |
|
99 Sep |
28 |
49 |
13 |
7 |
2 |
1 |
|
99 Aug |
27 |
49 |
13 |
8 |
2 |
1 |
|
99 Jul |
31 |
44 |
14 |
6 |
2 |
3 |
|
99 Jun |
26 |
49 |
12 |
8 |
4 |
1 |
|
99 May |
27 |
48 |
14 |
7 |
3 |
1 |
|
99 Apr |
28 |
47 |
14 |
6 |
4 |
1 |
|
99 Mar |
28 |
47 |
14 |
9 |
2 |
* |
|
99 Feb |
31 |
45 |
12 |
6 |
4 |
2 |
|
98 Dec |
23 |
47 |
16 |
10 |
3 |
1 |
|
98 Sep |
24 |
44 |
14 |
11 |
5 |
2 |
|
98 Jun |
28 |
43 |
16 |
7 |
3 |
3 |
|
98 Mar |
32 |
41 |
16 |
7 |
2 |
2 |
|
97 Dec |
30 |
42 |
17 |
7 |
2 |
2 |
|
97 Sep |
31 |
41 |
15 |
8 |
3 |
2 |
|
97 May/Jun |
28 |
46 |
14 |
8 |
3 |
1 |
|
97 Feb/Mar |
27 |
44 |
15 |
7 |
4 |
3 |
|
96 Nov |
30 |
39 |
19 |
7 |
4 |
1 |
|
96 Oct |
27 |
44 |
17 |
7 |
3 |
2 |
Do you think now is a good time to invest in the financial markets, or not?
|
Yes |
No |
Don't know/refused |
|
|
% |
% |
% |
|
|
01 Oct |
73 |
26 |
1 |
|
01 Sep |
53 |
46 |
1 |
|
01 Aug |
64 |
33 |
3 |
|
01 Jul |
66 |
31 |
3 |
|
01 Jun |
68 |
30 |
2 |
|
01 May |
68 |
30 |
2 |
|
01 Apr |
64 |
34 |
2 |
|
01 Mar |
65 |
32 |
3 |
|
01 Feb |
64 |
34 |
2 |
|
01 Jan |
65 |
32 |
3 |
|
00 Sep |
75 |
22 |
3 |
|
00 Aug |
75 |
22 |
3 |
|
00 Jul |
73 |
26 |
1 |
|
00 Jun |
73 |
25 |
2 |
|
00 May |
73 |
24 |
3 |
|
00 Apr |
74 |
23 |
3 |
|
00 Mar |
73 |
25 |
2 |
|
00 Feb |
78 |
19 |
3 |
|
00 Jan |
77 |
19 |
4 |
|
99 Dec |
72 |
24 |
4 |
|
99 Nov |
73 |
25 |
2 |
|
99 Oct |
64 |
34 |
2 |
|
99 Sep |
72 |
25 |
3 |
|
99 Aug |
67 |
30 |
3 |
|
99 Jul |
77 |
20 |
3 |
|
99 Jun |
71 |
25 |
4 |
|
99 May |
74 |
23 |
3 |
|
99 Apr |
71 |
25 |
4 |
|
99 Mar |
77 |
26 |
2 |
|
99 Feb |
73 |
24 |
3 |
|
98 Dec |
63 |
33 |
4 |
|
98 Sep |
65 |
32 |
3 |
|
98 Jun |
72 |
23 |
5 |
Do you think the stock market is overvalued, valued about right, undervalued, or are you unsure?
|
Overvalued |
Valued about right |
Undervalued |
Don't know/refused |
|
|
% |
% |
% |
% |
|
|
01 Oct |
17 |
25 |
28 |
30 |
|
01 Sep |
27 |
21 |
19 |
33 |
|
01 Aug |
31 |
25 |
18 |
26 |
|
01 Jul |
26 |
27 |
19 |
28 |
|
01 Jun |
31 |
29 |
16 |
24 |
|
01 May |
30 |
26 |
19 |
25 |
|
01 Apr |
30 |
26 |
18 |
26 |
|
01 Mar |
29 |
24 |
17 |
30 |
|
01 Feb |
35 |
28 |
14 |
23 |
|
01 Jan |
35 |
30 |
13 |
22 |
|
00 Sep |
41 |
33 |
5 |
21 |
|
00 Aug |
43 |
33 |
5 |
19 |
|
00 Jul |
42 |
31 |
6 |
21 |
|
00 Jun |
47 |
27 |
6 |
20 |
|
00 May |
47 |
28 |
5 |
20 |
|
00 Apr |
46 |
26 |
6 |
22 |
|
00 Mar |
47 |
27 |
5 |
21 |
|
00 Feb |
48 |
32 |
3 |
17 |
|
00 Jan |
48 |
26 |
4 |
22 |
|
99 Dec |
46 |
26 |
5 |
23 |
|
99 Nov |
47 |
29 |
3 |
21 |
|
99 Oct |
46 |
25 |
4 |
25 |
|
99 Sep |
49 |
27 |
3 |
21 |
|
99 Aug |
48 |
24 |
5 |
23 |
|
99 Jul |
50 |
29 |
3 |
18 |
|
99 Jun |
48 |
30 |
3 |
19 |
|
99 May |
55 |
24 |
3 |
18 |
|
99 Apr |
50 |
25 |
3 |
22 |
|
99 Mar |
57 |
20 |
2 |
21 |
|
99 Feb |
54 |
23 |
5 |
18 |
|
98 Dec |
46 |
24 |
5 |
26 |
|
98 Sep |
46 |
24 |
10 |
20 |
|
98 Jun |
46 |
25 |
4 |
25 |
A year from now, do you think the stock market will be higher than it is now, lower, or about the same?
|
Much higher |
Somewhat higher |
About the same |
Somewhat lower |
Much lower |
Don't know/ Refused |
|
|
% |
% |
% |
% |
% |
% |
|
|
01 Oct |
13 |
58 |
23 |
3 |
1 |
2 |
|
01 Sep |
7 |
50 |
31 |
9 |
2 |
1 |
|
01 Aug |
5 |
48 |
36 |
7 |
1 |
3 |
|
01 Jul |
8 |
48 |
34 |
7 |
1 |
2 |
|
01 Jun |
6 |
48 |
35 |
8 |
1 |
2 |
|
01 May |
10 |
48 |
32 |
7 |
2 |
1 |
|
01 Apr |
8 |
50 |
32 |
6 |
2 |
2 |
|
01 Mar |
6 |
47 |
34 |
10 |
1 |
2 |
|
01 Feb |
7 |
43 |
38 |
9 |
2 |
1 |
|
01 Jan |
5 |
46 |
35 |
8 |
3 |
3 |
|
00 Dec |
7 |
39 |
32 |
14 |
4 |
4 |
|
00 Nov |
5 |
40 |
41 |
10 |
2 |
2 |
|
00 Oct |
5 |
38 |
41 |
11 |
2 |
3 |
|
00 Sep |
4 |
40 |
44 |
8 |
* |
4 |
|
00 Aug |
6 |
43 |
37 |
9 |
1 |
4 |
|
00 Jul |
5 |
43 |
39 |
8 |
2 |
3 |
|
00 Jun |
2 |
45 |
37 |
10 |
2 |
4 |
|
00 May |
4 |
45 |
37 |
10 |
1 |
3 |
|
00 Apr |
7 |
45 |
34 |
11 |
1 |
2 |
|
00 Mar |
5 |
38 |
38 |
15 |
2 |
2 |
How would you describe current economic conditions in the United States today? Would you say the economy is currently: (Read and rotate 1-4)?
|
In a sustained expansion |
In a recovery |
In a slowdown |
In a recession |
Don't know/ Refused |
|
|
% |
% |
% |
% |
% |
|
|
01 Oct |
3 |
10 |
59 |
27 |
1 |
|
01 Aug |
9 |
17 |
64 |
8 |
2 |
How long do you think it will be before the United States is on the way to an economic recovery?(Read and rotate 1-5) [BASED ON THOSE WHO THINK THE ECONOMY IS NOT IN A RECOVERY OR EXPANSION; N = 885; MARGIN OF ERROR = +/- 4 %]?
|
Within the next 3 months |
Within the next 6 months |
Within a year |
Within at least 2 years |
At least 2 years from now or longer |
Don't know/ Refused |
|
|
% |
% |
% |
% |
% |
% |
|
|
01 Oct |
3 |
17 |
37 |
20 |
22 |
1 |
|
01 Aug |
1 |
10 |
30 |
20 |
36 |
3 |
How serious of an impact do you think that last month's terrorist attack on the United States, and the subsequent impact on the U.S. financial markets, is having on your own investments?
|
Extremely serious |
Very serious |
Moderately serious |
Slightly serious |
Not serious at all |
Don't know/ Refused |
|
|
% |
% |
% |
% |
% |
% |
|
|
01 Oct |
9 |
18 |
39 |
22 |
12 |
* |
Which do you think is more likely to happen? 1) The United States can have a full economic recovery and still fight a war against terrorism, or 2) The U.S. economy can never fully recover as long as the United States is engaged in a war on terrorism (Read and rotate 1-2)?
|
The US can have a full economic recovery and still fight a war against terrorism |
The US economy can never fully recover as long as the US is engaged in a war on terrorism |
Don't know/ Refused |
|
|
% |
% |
% |
|
|
01 Oct |
74 |
22 |
4 |
