Stock exchange traded funds were lower Tuesday following a report estimating that consumer confidence fell in August to its lowest level in over two years.
The Conference Board said its consumer confidence index fell to 44.5 from 59.2 in July as the decline was sharper than economists had expected.
However, consumers aren’t the only ones losing confidence in the U.S. economy. Advisors are growing more pessimistic over the economy and stock markets, according to a survey from exchange traded fund manager Rydex|SGI.
According to a Rydex|SGI note, the Advisor Confidence Index (ACI), which gauges advisor views on the economy and the equities market, reveals that advisor confidence in the economy and the stock markets fell 5.75% in August month-over-month.
The recent drop in advisor sentiment negated the slight gains in July and brought the index to 20% lower than January’s closing level.
“The debt ceiling and debt downgrade circuses in Washington are a sideshow relative to the global economic slowdown unfolding,” remarked James Dailey of TEAM Financial Managers in the note. “The slowdown and the risks of a transition to a new recession in 2012 remain our analytical focus.”
“We think the budget battle in Washington and the recent S&P downgrade is just the beginning,” said Jim Elder of ElderAdo Financial. “Even though U.S. corporations are showing strong earnings, we see the U.S. government struggling as it deals with numerous problems. We are in another recession, but this time it’s a government recession, not a corporate recession.”
For the month, 60% of responding advisors made changes in their portfolio allocations. Of the advisors, 16% put more into fixed income while 24% allocated more into a higher cash position.
Max Chen contributed to this article.
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
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