- Fifty-four percent of millionaires think the S&P 500 will gain at least 5% in 2020.
- But 39% of millionaires think the U.S. economy will weaken next year.
- Political partisanship is a factor: 62% of Democrats predict softer economic conditions.
- Just over half of political Independents (51%) think the S&P 500 will be either flat or down next year.
America’s wealthy are showing increased levels of anxiety about the economy and stock market headed into 2020, but overall sentiment from the wealthy remains baseline optimistic. Most millionaires do not expect big things, or the U.S. economy going over a cliff, in the next year, according to the results of the new CNBC Millionaire Survey.
After a recession-less decade and a stock boom for the record books in 2019, the more cautious view from millionaire investors when it comes to their money is not surprising.
The 39% of millionaires who think the economy will weaken next year represents a significant rise, of 14%, from the Spring survey, but the majority of the wealthy expect the economy to “be the same” (38%) or “get stronger” (27%).
Meanwhile, the 54% of millionaires who expect a gain of 5% or more from the S&P 500 in 2020 is down from 65% in the Spring 2019 survey.
The CNBC Millionaire Survey for the Fall 2019 was conducted in November among 700 people with investable assets of $1 million or more.
Political partisanship plays a big role in the survey responses. Among Democrats, 62% think the economy will weaken next year versus only 19% of Republicans. Democrats are far more likely (43%) to say the S&P 500 will suffer a decline; only 15% of Republicans anticipate a stock market decline.
In the November 2015 CNBC Millionaire Survey, the reaction on the economy and investing was similar in direction, but opposite in politics: Democrats felt very optimistic about the next 12 months and Republicans more negative. At the time, the Democrats were in office and Hillary Clinton was leading in the polls. Independents were in the middle in both studies.
Where Independents see the economy heading
Independents are in the middle again, but leaning towards the Democrats on economic and market issues, with 47% of those politically identifying as Independents saying the economy will be weaker. A slim majority of Independents (51%) say the S&P 500 will end the year either flat or down.
“Typically, Independents are pretty middle of the road and don’t go too far to the right or left. However, as we see some concern about the overall economy … the Independents shift more to the side of the Democrats,” said Tom Wynn, director of research at Spectrem Group, which conducts the Millionaire Survey for CNBC.
Paul West, managing partner at Carson Wealth, which represents high-net-worth investors, said the political affiliation viewpoint on the S&P 500 is not surprising. “Just look at the impeachment vote. The party lines were followed, and since each party is beating its respective drum about the direction of the economy, it’s not a surprise about the difference between Republicans and Democrats.”