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W&AM Insights: Positive Economic Outlook Remains Very Low in April 2020

Economic Outlook

Following its record decline in March 2020, this month’s W&AM Economic Optimism trend line rebounded slightly among Mass Affluent from 26% to 32% but fell even further to a new all-time low with HNW investors – from 32% to 23%. Even though W&AM Economic Optimism improved in the Mass Affluent audience this month, it still rates significantly lower than late 2019 and early 2020 levels before the COVID-19 pandemic, which typically averaged around 70%.

Investing Outlook

The W&AM Investment Optimism rating held mostly steady across both audiences in April 2020. Among HNW investors, W&AM Investment Optimism saw a modest 2% decline, while Mass Affluent respondents indicated a slight improvement in their likelihood to increase net investments, moving from 29% to 31% this month. However, both segments reported an uptick in intent to decrease their overall investments compared to the last wave. Roughly 6 in 10 Mass Affluent and half of HNW investors plan to make no changes to their overall investments in the next three months.

Perspective

The ongoing COVID-19 pandemic clearly continues to weigh on the minds of affluent investors, as last month’s steep declines in both economic and investment outlooks largely hold true again in April. High Net Worth households with at least $1 million in assets are even more pessimistic than their Mass Affluent counterparts, with less than 1 in 4 reporting optimism about the economy within the next three months – an all-time low among either audience. While ratings did rebound somewhat this month among Mass Affluent investors, their W&AM Economic Optimism trend line is still less than half of what it was months ago. As COVID-19 cases continue to sweep through the US, combined with the lack of a coherent future strategy between states and the federal government, it is evident that it will take time for affluent investors to regain confidence in the economy. An increasing number of investors are likely to feel the direct impact of the current bear market moving forward, given that now roughly 10% of HNW and Mass Affluent consumers plan to reduce their overall level of investment in the coming three months – and thus will likely suffer notable losses in the process.

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