An increasingly partisan divide over whether to raise the debt ceiling and disappointing news on the unemployment and jobs fronts are doing nothing to bolster investor confidence in the direction of the economy.
Nearly half of investors we surveyed in June (48.1 percent) “disagreed” or "strongly disagreed” that the employment situation will improve within the year. Nearly 30 percent were neutral on the question, while just fewer than 23 percent overall thought it would improve.
Of the investors with a pessimistic outlook on the job situation, those ages 41-60 were the most likely to hold this attitude, while investors less than 40 years-old were most likely to be optimistic than older investors.
In another survey we conducted earlier this year of Mass Affluent investors with a net worth between $100,000 and $1 million, just over half of those under the age of 55 were most concerned about either themselves or a member of their household losing their job.
The most recent reports on jobs and unemployment are no doubt confirming investors’ worst fears. The unemployment rate rose again, to 9.2 percent, while two unemployment reports released last week offered startlingly contradictory information. The ADP Small Business Report, created by Automatic Data Processing, Inc. in partnership with Macroeconomic Advisors, LLC, said that the private sector added 157,000 jobs from May to June. This was far higher than the Dept. of Labor’s report that the economy added just 18,000 private sector jobs in June, the lowest figure in nine months.
According to the Center for Economic and Policy Research, the economy needs 90,000 jobs per month to keep pace with the growth of the population. The economics blog Calculated Risk cites Congressional Budget Office estimates we would need up to 391,000 jobs every month (depending on population growth and labor force participation) just to lower unemployment to 8.2 percent.