Salient to Investors:
Americans are allocating a smaller share of their spending to investment-related fees since the recession, a sign they are still wary of returning to financial markets.
Stuart Hoffman at PNC Financial Services said people are shying away from stocks since the recession and have not really re-engaged in equities again.
Komal Sri-Kumar at Sri-Kumar Global Strategies said Americans are not budgeting as much for investment activities, suggesting many have not recouped losses from the stock market’s rout and illustrates consumer enthusiasm does not exist right now, particularly for stocks. Sri-Kumar said consumer reluctance to spend on financial services is essentially a time bomb for the future because it cannot just be institutional investors in the equity market.
ICI reports outflows from US-based stock mutual funds of $1.4 billion in February and have been negative for 36 out of 44 months since the recession ended.
Charles Rotblut at AAII says there’s an underlying sense of bearishness and frustration as people are nervous of another recession emanating from the European debt crisis.
Greg McBride at Bankrate says near record-low interest rates have not been enough to push would-be investors back into the stock market, while 76 percent say they are not more inclined to invest because of low rates offered for savings accounts and CDs, unchanged from a year ago despite lower interest rates and higher stocks.
Robert Dye at Comerica Bank said investment-related spending appears to be stabilizing from the artificially high level reached in the market boom that preceded the recession, when the speculative environment in 2006 and 2007 encouraged activities like day trading. Dye said investment spending has not fallen below its 23-year average, showing people are not stuffing money in the mattress.
Health-care expenditures accounted for 16.3 percent of total personal consumption in February, up 2 percent from the 10-year pre-recession average.
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