Investors more pessimistic about inflation: Gallup survey

Investors are growing more pessimistic about inflation, according to a Gallup survey released Tuesday.

Investors’ 12-month outlook for inflation grew worse between the first quarter of 2021 and second quarter of 2021, according to the Gallup Investor Optimism Index.

The net optimism score for inflation dropped to -43 in the second quarter, down 15 points from -28 in the first quarter.

Consumer prices rose by 0.9 percent in June to 5.4 percent, according to the consumer price index (CPI) released Tuesday by the Labor Department. It was the largest recorded increase since August 2008.

As Gallup noted, investors tend to be more pessimistic than optimistic about inflation, even before the pandemic.

But despite growing more pessimistic, investors are largely reporting not changing their investments as a result.

Sixteen percent of investors surveyed by Gallup said they changed their investments in the past month, while 84 percent had not.

However, 53 percent of respondents said they would “seriously consider making changes” if inflation persisted beyond the pandemic, while 47 percent said they would not.

The index includes investors’ ratings for four aspects of the economy and three aspects of their personal finance and investments. Of the economic aspects, inflation was the only one where investors grew more pessimistic.

Investors’ optimism unemployment grew to 10 in the second quarter, up from -3 in the first quarter, the survey found.  The index score for economic growth was at 20 in the second quarter, up from 11 in the first quarter.

Optimism for the stock market remained steady at 18, the survey found.

Gallup surveyed 1,037 U.S. investors from June 22-29. The margin of sampling error is 5 percentage points.