Confidence among millionaire investors plummeted 10 points to 1 in February, according to Spectrem’s Millionaire Investor Confidence Index, meaning these investors had a neutral attitude.

Confidence among millionaire investors plummeted 10 points to 1 in February, according to Spectrem’s Millionaire Investor Confidence Index, meaning these investors had a neutral attitude. However, this represented a severe dent in confidence, which had soared to a near two-year high of 11 in January.

The index, which is based on online interviews, assigns a numerical score of between 51 and -51 for outlooks ranging from bullish to bearish.

Just under a fifth (19 per cent) of millionaire investors referred to the "sequester" - government-imposed spending cuts worth $85 billion scheduled to take effect on March 1 - as the news story having the most impact on their outlook.

After this, the most common responses were the political climate (18 per cent); the deficit (12 per cent); the economy (9 per cent); unemployment (9 per cent); international problems (6 per cent); and stock market conditions (6 per cent).  

Meanwhile, Spectrem’s Affluent Investor Confidence Index shows that, although confidence among investors with $500,000 or more in investable assets declined to a lesser extent than among millionaires, confidence still dropped 3 points from January’s reading of -4 to -7. This represents the 10th consecutive month that this index has been in negative territory.

When asked which news story is having the most impact on their economic outlook, 22 per cent of affluent investors said the political climate, while 16 per cent cited impending budget cuts.

“These cuts will reportedly burden programs in national defense, education, public health, and the economy,” Spectrem Group said.

Household confidence

Spectrem said the drops in both indexes are also reflected in its monthly Affluent Household Outlook survey, which looks at attitudes towards financial factors impacting investors’ daily lives.

The millionaire overall outlook declined from 6.04 points to 5.19. The non-millionaire outlook posted a more severe drop, of 4.59 points, resulting in a three-month low reading of -14.93.

When it comes to household income specifically, confidence among millionaire investors took a 5.96-point tumble to 2.24, while faith in the economy dropped 14.27 points to -5.56.

Among non-millionaire investors, confidence in household income plummeted 16.66 points to produce a reading of -21.84 - an almost four-month low.

Millionaire investors are, however, upbeat about household assets, which posted a reading of 22, down slightly by 1.04.

As Spectrem highlights, February began with news that for the first time in three years the US economy had contracted in the fourth quarter. And while 187,00 jobs were added, unemployment increased to 7.9 per cent.

With a fiscal cliff deal reached at the beginning of the year, “investors braced themselves as lawmakers grappled with the automatic spending cuts,” Spectrem said.

The Affluent Investor Confidence Index is based on 250 monthly online interviews with the financial decision-makers in households with $500,000 or more in investable assets. The Millionaire Investor Confidence Index is based on a subset of the overall survey group.