WSJ Survey Finds Confidence About The Economy Rising Among Readers

Confidence in the economy’s future is rising among readers surveyed by WSJ Intelligence, although a large majority view geopolitical tensions and the slowdown in consumer spending as posing significant risks ahead.

The “Consumer Confidence and Economic Monitor” study conducted in early February with 833 readers of The Wall Street Journal, Barron’s, and MarketWatch, revealed 27% of respondents were optimistic about the economy’s prospects in the next 12 months, up from 18% among those surveyed in September.

The measure of optimism is also up from the mere 8% recorded in July 2022 after the Federal Reserve raised short-term rates by 0.75 percentage points. 

However, it’s still far off a recent high of 60% after a strong post-Covid GDP report in June 2021, according to Anaima Troncoso, a research analyst with WSJ Intelligence, which has conducted surveys of reader confidence in the economy since 2016. 

“Optimism remains low—this is largely attributed to the emotional impact, the strain on consumers’ wallets caused by inflation,” Troncosco says. 

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Those who did express optimism were encouraged by the outlook for inflation and lower interest rates, results show. Among factors negatively affecting the economy, inflation was cited by 60% of survey respondents, but that’s down 24 points from the previous survey; 47% of respondents remain concerned about interest rates, but that’s 27 points lower than in September. 

Geopolitical tensions, however, are rising as a concern, cited by 75% of respondents (up 22 points), as conflicts rage in Eastern Europe and the Middle East. A slowdown in consumer spending was cited by 65% of respondents, up six points. 

These potential risks are affecting investment strategies. Among those surveyed, 65% said geopolitical tensions are a factor driving adjustments in their investments, up 12 points from September, while 60% cited monetary policy, consistent with the last survey, and 58% cited interest rates, down 5 points.

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In response, readers are reevaluating the assets in their portfolios (53%), changing their allocations (43%), and consulting with a financial advisor (37%). Of those surveyed, 10% say they will invest in so-called alternatives, such as private equity, hedge funds, art and collectibles, and wine. 

When it comes to their own finances, readers were more positive, with 48%  upbeat about the status of their household, up from 33% in September. 

Most readers surveyed are upbeat about U.S. stocks, with 64% saying they are “somewhat or very bullish” on the sector, up 14 points from September; 37% are bullish on international stocks, up 8 points; and 35% are bullish on real estate, up 4 points. 

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The research highlights the fact that 37% of respondents recognize the need to invest in alternatives—up 10 points from a year ago—coinciding with an industry push to tap private wealth investors for this sector. Readers cite portfolio diversification (45%), higher returns (36%), and an improved risk/return profile (31%) as the top reasons for investing in these other sectors. 

Concerns with alternatives expressed by readers include their lack of transparency (55%), potential fees (51%), and greater complexity (44%). 

Among alternative investment options, most readers (48%) invest in real estate, while 20% invest in “precious objects,” 19% in private equity, and 11% invest in venture capital.

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Readers were also asked about their investments in property and so-called passion assets. Among the 733 who responded, 26% have second homes (down 2 points from September), 26% invest in residential rental properties, 20% in art and collectibles, 20% in jewelry, and 12% each in wine and spirits and watches—both slightly less than earlier. 

Among those with investable assets of US$5 million or more, 46% invest in second homes, 34% in rental properties, 27% in jewelry, and 23% in art and collectibles. 

Of the total 833 individuals surveyed, 32% had household income between US$100,000 and US$200,000, and 20% had income between US$200,000 and US$300,000; another 7% had income above US$1 million. 

The Wall Street Journal, Barron’s (including Penta), and MarketWatch are all owned by Dow Jones

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