Flashback: "My expectation is that after the election... we can start getting some cooperation again."
The sequester is dominating the financial news, but Affluent investors are looking at the bigger picture when asked which news story is most impacting their economic outlook. The highest percentage of respondents (22 percent) say it is political climate.
Since the presidential election, there has been no break in the clouds, from the debt ceiling to the fiscal cliff, to the sequester, and from gun control to climate change and the blocking of presidential appointments. Lawmakers remain seemingly irrevocably and intractably at odds with their colleagues from across the aisle.
At a fundraiser last June, President Obama remarked, "My expectation is that after the election... we can start getting some cooperation again." Nothing doing. The sequester, the government-imposed $85 billion in across the board spending cuts scheduled to take effect at midnight, is only the latest standoff between Democrats and Republicans.
This unrelenting gridlock is surely a factor in the reported downturn in The Spectrem Affluent Investor Confidence Index (SAICI®), which measures the investment confidence and outlook of households with $500,000 or more in investable assets. It dropped three points in February to -7, the 10th consecutive month the Index has been in negative territory.
The sequester itself is the second most-cited news story that Affluent investors say is impacting their economic outlook and financial planning. The mandated spending cuts will reportedly burden programs in national defense, education and public health, and analysts caution, could hamper the economic recovery. The plan was introduced in the debt reduction debate in 2011. The cuts can only be averted by a bipartisan agreement between Congress and the White House.
Among Affluent investors, this issue is of higher concern to Millionaires, 19 percent of whom said this was the news story they are most closely following.
Integral to the debate over the sequester, as with the fiscal cliff, is the federal deficit, which 10 percent of Affluent investors called the most impactful news story. This is a dramatic increase from the 3 percent who responded similarly in November when this question was last asked.
Similarly, other specific issues that have a bearing on economic outlook experienced jumps in the last three months as news stories on which investors are keeping a close watch. They include the Economy (9 percent), Unemployment, which in January increased to 7.9 percent (8 percent), Stock Market Conditions (6 percent) and International Problems (5 percent)
Each of these increased at least three percentage points over the course of three months.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.