Investor Attitudes Shaken in Tumultuous Month

The Spectrem Affluent Investor Confidence Index (SAICI)^SM fell nine points to a mildly bearish -18 points. The Spectrem Millionaire Investor Confidence Index (SMICI)^SM dropped four points to a neutral -9. Both levels are the lowest in a year. August was a particularly tumultuous month for investors. It began with the unprecedented downgrade of the U.S. debt, which triggered the worst market sell-off in two years and subsequent days of see-sawing market activity. It is not surprising that many chose not to invest. This was especially true in Non-Millionaire households, which posted declines in every investment category. Millionaires were not as willing to sit on the sidelines. They were less likely to Invest in Cash and to dabble more in Stocks as well as Bonds.

But the volatility of the market and the fractious political environment did shake investor confidence in the direction of the economy. The Spectrem Affluent Household Outlook, which measures attitudes toward Household Assets, Household Income, the Economy, and Company Health, dropped precipitously to its lowest level in more than two years. Pessimistic attitudes toward the Economy, especially in Non-Millionaire households, drove this latest downturn.

The political environment and its bearing on economic issues was the news story that investors said most impacted their economic outlook. Despite the last-minute deal to raise the debt ceiling and avoid the country's first-ever default, it was in part the lack of bipartisanship that Standard & Poor’s cited as a key factor in its decision to lower the country's credit rating.  Stock Market Conditions were, understandably, also being watched closely by investors.

Other intertwined economic issues, such as the overall economy, unemployment, the deficit, and international problems also impacted investors' economic outlook.