Economic Conditions - Investors show little optimism

April 2010

At a time when the country is torn about the recent health care legislation, it is clear that investors feel little to nothing is being done to fix U. S. economic conditions. The somewhat negative feelings about the economy continued this month although there were some minor adjustments among the attitudes of the Millionaires and the non-Millionaires. Last month the Millionaires were as negative as the non-Millionaires at -10. This month they rose to -6. Last month the affluent were at -10 and this month they became more bearish at -12.

Both the Millionaires and non-Millionaires believe that the Economy and the Political Environment are almost equally responsible for the dour outlook regarding their financial situation. These opinions have been somewhat consistent for a rather long period of time. If the focus of the administration truly does finally shift from health care to the promised issue of jobs, it will be interesting to see whether attitudes will change.

Attitudes regarding Company Health and Household Assets are recovering somewhat from their lower scores earlier in the year. At the same time, the concern over the economic conditions continues to increase. The Household Income factor remains constant and the overall Household Outlook is increasing slowly each month.
Interest in investing is increasing, but only slightly. The preference for Cash remains, but is decreasing slightly. Bond Mutual funds grew as a preferred investment this month, indicating that the move towards conservative asset allocation continues.

There are many issues other than economic conditions weighing on the minds of investors at this time. These issues will cause investors to maintain their negative attitudes until they begin to receive some clarity on how various issues will impact them. One of the biggest concerns for both Millionaires and non-Millionaires is the issue of taxes. These households understand that the health care legislation is expensive. This legislation is now being added to the highest deficit ever experienced by the United States. These households are confident that a tax increase is on the way. Unfortunately, the answer to the additional impact (over the 9 percent already included in the health care bill) will probably not be addressed until after the 2010 elections. That is a long time to leave these households uncertain about the future and will certainly continue to impact their attitudes about the economy.