Aggregated quarterly data from the UBS/Gallup Index of Investor Optimism suggested that in the second quarter of 2003, investor optimism around the country was rebounding after a three-year decline. However, that rebound did not persist into the third quarter -- new aggregated data from the third quarter show modest declines in most parts of the country*. Investors living in the West are the exception to this rule, as their overall optimism climbed slightly in the third quarter, but optimism specifically regarding the country's economic climate declined at least somewhat in every region of the country.
Eastern Region
During the first quarter of 2000, the overall Index of Investor Optimism score was 165 in the East. Over the next three years, optimism among investors in the East mostly declined, reaching -6 during the first quarter of 2003. In the second quarter of 2003, investor optimism among Easterners made a 54-point leap to 48, but then declined 13 points to 35 in the third quarter. Overall, the declines in the East since early 2000 have been steadier on the Personal Dimension of the Index (which measures investors' optimism about their own personal investment situations) and more volatile on the Economic Dimension of the Index (which measures optimism about the country's overall economic situation). However, in the third quarter of 2003, the Personal Dimension declined by eight points in the East, while the Economic Dimension declined only five points.
Midwestern Region
Investor optimism has followed a similar path in the Midwest. The overall Index measuring optimism among Midwestern investors finished the first quarter of 2000 at 154. By the first quarter of 2003, it had declined to 21. The Midwestern Index then increased 35 points to 56 in the second quarter of 2003, and declined 7 points to 49 in the third quarter.
In the third quarter of 2003, the Index's Personal Dimension declined by four points in the Midwest, while the Economic Dimension fell three points.
Southern Region
In the South, the overall Index dropped from 170 in the first quarter of 2000 to 33 in the first quarter of 2003. This low point was followed by an increase of 45 points to 78 in the second quarter of this year. Then, as was true in the East and Midwest, investor optimism declined somewhat in the third quarter, to 69. This score is slightly higher than it was in the third quarter of 2002, when the overall Index stood at 63 in the South.
In the South, the third-quarter decline was due more to declines in the Economic Dimension (six-point decline) than the Personal Dimension (three-point decline).
Western Region
In the first quarter of 2000, investor optimism stood at 171 in the West; by the first quarter of 2003 it had fallen to 18. In the second quarter of 2003, the overall Index jumped 43 points to 61, and in the third quarter, it rose 9 points to 70. This is the highest third-quarter score that Gallup has measured in the West since 2000, when the Index stood at 153.
A gain of 11 points on the Personal Dimension of the Index among investors in the West was offset by a 2-point decline on the Economic Dimension.
Bottom Line
In the third quarter, investor optimism declined for most of the country, with the notable exception of the Western region. Among the possible factors in the recent gains in optimism among Western investors is the strengthening performance of technology stocks, since the tech industry has a strong presence in that part of the country. But even in the West, the Economic Dimension of the Index declined (albeit minimally), suggesting that overall, investors have become slightly more pessimistic this quarter about the prospect for an economic recovery.
*Results are based on telephone interviews with more than 1,000 investors nationwide, aged 18 and older, conducted monthly since January 2000. For results based on these total samples, one can say with 95% confidence that the margin of sampling error is ±3%. Each region consisted of at least 600 interviews per quarter.
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 "Midwest": Ohio, Michigan, Indiana, Illinois, Wisconsin, Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska, and Kansas
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 "West": Montana, Arizona, Colorado, Idaho, Wyoming, Utah, Nevada, New Mexico, California, Oregon, and Washington
