Inflationary concerns are still on the minds of investors with 55% expecting an increase and 28% expecting it to remain the same. Investors' outlook on U.S. economic growth, however, has continued to shift downward as 30% foresee a negative (recession) GDP growth compared to 6% in the September 2007 sentiment indicator. Another significant change since September 2007 is how investors feel about interest rates with 27% anticipating the Federal Reserve to raise rates from current levels (up from 4%) and 30% thinking the Fed will lower short-term rates (down from 67%).
The economy is the primary concern of investors as trillions of dollars have been lost from home values and retirement plans. As such, investors were asked what they expect the financial crisis to do in 2009, with 45% foreseeing it to ease up, 30% for it to get worse, and 25% for it to stay about the same. When asked about nationwide housing prices in 2009, 53% expect them to stop falling, 41% to fall more, and 5% to start rising. As for taxes under the new administration and congress, 59% of investors think that taxes on dividends and capital gains, as well as income taxes on top earners, will be raised. Only 5% felt that taxes would be cut.
The MoneyShow.com Investors' Sentiment Indicator polled 500 investors from its member list between October 29 and November 3, 2008.
