More investors now see a "politically divided federal government" as the top factor affecting the investment climate than the unemployment rate or federal budget deficit, according to a recent poll.

In a Wells Fargo/Gallup poll, 69 per cent of US investors shared the view that political divisions were key to the investment climate, compared to 67 per cent citing the unemployment rate and 67 per cent citing the federal budget.

Amid such worries, overall investor optimism declined in July, down to +16 from +24 in May, and down from +40 in February. Under half of respondents think now is a good time to invest.

The “fiscal cliff” – or the dilemma the US government faces at the end of the year, when several stimulus measures expire and additional budget-cutting measures are planned to come into effect – is also on the minds of investors. Over half (54 per cent) said they are paying a “great deal” or “quite a lot” of attention to the issue, and 61 per cent think the US economy will go into recession if the issue isn’t addressed.

“People watched the impasse of the debt ceiling negotiations last summer and the effect the breakdown had on the markets and 401(k) balances, so it makes sense that investors are attuned to policy affecting debt and taxes. Investors are clearly telling us they worry about a recession,” said Joe Ready, director of  Wells Fargo Institutional Retirement and Trust.

Meanwhile, three in four investors think the presidential and congressional elections of 2012 are set to impact their net worth in some way, with 43 per cent expecting a major impact and 33 per cent expecting a minor impact. The same proportion (three in four) think the president, Congress, and the private sector all have responsibility for fixing the economy.

As to whether finances have improved or worsened over the last four years, no clear picture emerged from the poll. Around 37 per cent think they are better off than prior to the 2008 elections; around 33 per cent think they are worse off. Most investors, though, said their household income had at least stayed the same or increased since then. Despite this, 43 per cent said they are saving less money, while 32 per cent are saving the same amount and 24 per cent are saving more.

“We feel strongly that people save their way to a solid retirement, and this continues to be a challenge for Americans. I think that many assume that work will be part of ‘retirement,’ although the availability of jobs for people in retirement age is not certain,” said Ready.

Backing up Ready’s concerns about retirement preparations, half of non-retired investors said they had “guessed” the amount of savings they would need for retirement. Only 31 per cent of this group has a written retirement plan. Non-retired investors expect to receive retirement funding from a variety of sources, namely: Social Security (24 per cent); 401(k) plans (69 per cent); pensions (32 per cent), and stock investments (35 per cent).

Interestingly, the already retired investors have more faith than the non-retired investors in Social Security and pensions, and less faith in 401(k)s and stocks.