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U.S. Investors' Optimism Ticks Up

U.S. Investors' Optimism Ticks Up

PRINCETON, NJ -- U.S. investors' economic views warmed a bit in the past quarter, even as frigid temperatures across much of the country kept job growth and retail sales in check. The Wells Fargo/Gallup Investor and Retirement Optimism Index rose to +37 in February from +25 in November. Still, the index remains slightly below its May 2013 level of +43, measured amid last year's bull market, as well as its 2011 and 2012 high points.

Trend: Wells Fargo/Gallup Investor and Retirement Optimism Index

The Wells Fargo/Gallup Investor and Retirement Optimism Index is a measure of broad economic and financial optimism among U.S. investors with $10,000 or more in any combination of stocks, bonds, mutual funds, self-directed IRAs, and 401(k)s. The index has been conducted quarterly since 2011 and, prior to that, was conducted quarterly from October 1996 through December 1998, and monthly from February 1999 to October 2009. The current results are based on interviews conducted Feb. 6-16 with 1,011 investors, including 358 retirees and 650 non-retirees.

Gains Seen More on Personal Than on Economic Dimension

Both components of the index improved in the latest quarter, with a 10-point jump to +45 from +35 in the personal component, and a five-point increase to -5 from -10 in the economic component. Improvement in the personal dimension mainly stems from heightened investor confidence in being able to maintain or increase their income over the next year. Most of the improvement in the economic dimension comes from increased investor optimism about economic growth, with little change in their optimism about unemployment, inflation, or the stock market.

Wells Fargo/Gallup Investor and Retirement Optimism Index -- Recent Trend in Personal vs. Economic Dimensions

Optimism Rises Mainly on Strength of Retirees' Improved Outlook

Optimism surged in the past quarter among retirees, rising to +41 in February from +6 in November. It was fairly steady among non-retirees, sitting at +35, similar to the previous reading of +32. This pattern of greater movement among retirees could be partly because optimism fell significantly more among retirees than among non-retirees between May and November of last year, possibly in reaction to low interest rates, as well as the federal budget showdown in September, and the resulting federal government shutdown in October. Now, with the stock market largely maintaining last year's gains, retirees may be feeling more confident about their finances as well as about the economy more broadly.

Wells Fargo/Gallup Investor and Retirement Optimism Index, Trend by Retirement Status

Just in the past quarter, retirees' optimism increased the most in terms of their outlook for maintaining or increasing their income in the next 12 months. Their net optimism score (percentage optimistic minus percentage pessimistic) on this rose 20 points to +38. Their net optimism about economic growth and the stock market improved nearly as much, while their outlook for inflation rose 10 points. Notably, retired investors' expectations for unemployment have not improved.

Wells Fargo/Gallup Investor and Retirement Optimism Index -- Retired Investors, February 2014

Bottom Line

Just as economic confidence among Americans as a whole has improved somewhat since last fall, U.S. investors' optimism has advanced modestly, rising 12 points to +37 in February. Investor optimism is not quite as high as it was last May, when the stock market was still surging, or as high as at several other points since 2011, but it has partially rebounded from its post-government-shutdown dip last fall. The reason for the rebound is not entirely clear, but given that it occurred almost entirely among retirees who, as a group, were consistently less confident than non-retirees in 2013, it could represent a delayed recovery for this group from last year's political shocks, aided by continued strength on Wall Street.

Survey Methods

Results for the Wells Fargo/Gallup Investor and Retirement Optimism Index are based on questions asked Feb. 6-16, 2014, on the Gallup Daily tracking survey, of a random sample of 1,011 U.S. adults having investable assets of $10,000 or more.

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

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

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