Investers Upbeat for Next Year

As Doubts on Economy Grow,
Stock Investors Stay Upbeat
By JOHN HARWOOD
March 7, 2007; Page A6

WASHINGTON -- Americans have become more pessimistic about the health of the economy, but investors remain confident about stocks despite recent market fluctuations.

A new Wall Street Journal/NBC News poll of American adults shows a significant decline in economic confidence since the year began. About 31% of Americans now expect the economy to get worse over the next year, double the proportion who said so in January.

Yet a smaller group of Americans with some stock-market investments remains bullish. Among those who say they have at least $5,000 in the market, 46% expect the market to move higher over the next year, while just 16% expect the market to fall. One-third expect the market to stay the same.

Investors "don't appear to be particularly shaken," says Democratic pollster Peter Hart, who conducted the Journal/NBC survey with Republican counterpart Neil Newhouse. But lagging spirits about the economy overall, Mr. Hart added, show the broader public mood is "anything but great."

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WSJ's John Harwood discusses the latest poll, noting greater-than-expected resilience in the investor community.The telephone poll of 1,007 adults was conducted March 2-5, following turbulence in American financial markets; the margin of error is 3.1 percentage points. About 45% of respondents say they have at least $5,000 invested in stocks and mutual funds, while 48% say they don't.

Last week's drop in the Dow Jones Industrial Average was linked to market declines in Asia. That followed remarks by former Federal Reserve Chairman Alan Greenspan signaling the possibility of a U.S. economic recession.

Whether influenced by reporting of Mr. Greenspan's remarks, or simply by their own experience, Americans as a whole are growing gloomier. Last fall, a month before the 2006 elections, American voters split evenly on whether the economy would get better or worse; by January, a slight plurality expected better times.

But now, the poll shows, just 16% expect the economy to strengthen while 31% expect it to weaken. About half of respondents say the economy will remain "about the same."

By contrast, self-described investors show confidence the value of their holdings will appreciate. The 46% who envision a rising market is slightly below the 55% who did in January 2003, and the 56% who did in July 2002.

But it exceeds the 35% expressing bullishness at the outset of the Bush administration -- as the economy was heading toward recession, and for the final three years of the Clinton administration. In Oct. 1999, 30% of Americans expected markets to rise, 26% expected them to fall, and 39% expected them to remain about the same.

Write to John Harwood at john.harwood@wsj.com