Wells Fargo

Overall Investor Optimism Dips in First Quarter, Black and African American Investors Signal Brighter Outlook Ahead

U.S. investor optimism dipped in the first quarter as unimagined turmoil roiled the nation’s capital and confusion and delays in the administration of COVID-19 vaccines captured public attention.

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Wells Fargo/Gallup Investor and Retirement Optimism Index (Photo: Wells Fargo)

The Wells Fargo/Gallup Investor and Retirement Optimism Index fell to +26, down 16 points from +42 in Q4. This reversed much of the improvement seen in the fourth quarter as the markets surged following positive news about COVID-19 vaccine trials.

The dip in optimism this quarter was in part due to investors being less optimistic about their household income. Within the index, investors’ 12-month outlook for inflation dropped the most this quarter. Slight declines were also seen in their positive forecasts for unemployment, the stock market and economic growth. At the same time, investors’ outlooks for reaching their investment goals were steady.

“The COVID-19 pandemic and ensuing economic and market downturn in 2020 tested investors’ resolve, but patience and resiliency were key in helping them weather the ongoing storm,” said Veronica Willis, investment strategy analyst for Wells Fargo Investment Institute.

The Wells Fargo/Gallup Investor and Retirement Optimism Index included U.S. adults with $10,000 or more in investible assets. The first quarter poll was conducted Feb. 8-16 with 1,536 investors, including 573 Black and African American investors weighted to their correct proportion of the U.S. investor population. This oversample was designed to allow for robust analysis of Black and African American investors’ views on a range of financial topics.

While Black and African American investors reported higher optimism, some cited negative impact on finances

Despite the downtick in overall investor optimism, Black and African American investors’ overall optimism score was +101, significantly higher than the national average. Even so, one in three (31%) still said that the pandemic has had a negative impact on their finances.

About one in six Black and African American investors (17%) said that their current income equals their expenses and one in eight reported they are either drawing on savings (10%) or running into debt (3%). Nevertheless, seven in 10 reported being able to save a little (53%) or a lot (17%).