Investors are worried over economic recovery, according to this new Wells Fargo, Gallup survey

Tracie McMillion of Wells Fargo Investment Institute joins Yahoo Finance’s The First Trade with Alexis Christoforous and Brian Sozzi to discuss the findings of a brand new Wells Fargo, Gallup survey of how investors feel about economic recovery.

Video Transcript

ALEXIS CHRISTOFOROUS: Now despite the stock market's huge run-up since March, most investors are still worried, and they are not fully confident we're out of the woods just yet. Those are the findings of a brand new Wells Fargo-Gallup survey out just a short time ago, and Wells Fargo's Tracie McMillion is with us now for an exclusive interview. Good morning, Tracie. Good to have you here.

So this is a little surprising. Even with the sell-off of the last two weeks, your survey found most investors describe current economic conditions as shaky or weak. What's behind that?

TRACIE MCMILLION: Sure. So this is a survey that we've actually conducted since 1996, and it was very interesting to see that the third-quarter results of the survey posted an index reading of 18. That was up from 4 in the second quarter. And the really interesting thing is that this was a huge drop from a 20-year high in the first quarter where the survey registered 138. So the survey can go either negative or positive, and it is just slightly positive here in the third quarter.

And you're correct. You know, this came in the middle of August, and investors at that time were seeing a stock market that was rising significantly, and we were in the midst of what could turn out to be the best GDP quarter ever. But that was following what was likely to be the worst GDP quarter ever, and that was still on investors' minds.

BRIAN SOZZI: How are-- you know, you've been doing this survey since 1996. How do investor expectations look now compared to other or prior recessionary periods in the country?

TRACIE MCMILLION: Yeah, so it's really interesting because this survey does tend to track the S&P 500. So if you overlay the survey data on the S&P 500, what you see is that as markets go up, investors become increasingly confident. As markets go down, investors become increasingly pessimistic.

So the high point for this index over that time period came in January of 2000 when it hit 152. So in the first quarter, we weren't too far off that all-time high. The all-time low was in February of 2009, not surprisingly, and it registered a negative 81 at that point. So at 18, we're not nearly as negative as we were back in 2009, but it's still a tremendous drop from where we were just six months ago.

ALEXIS CHRISTOFOROUS: And, Tracie, of course we have the election coming up in less than two months now. What are people telling you are their biggest concerns as we move closer to election day?

TRACIE MCMILLION: Yeah. Well, not surprisingly, it's the economy. And when we surveyed investors-- and this survey is the investors that have $10,000 or more invested. They said the economy, by 98%, was at least somewhat important to them. So, by and large, the biggest concern on investors' minds.

And health care came in second. That was a 90% at least somewhat concerned. And then education, taxes, immigration, and then COVID at 79% of investors that were at least somewhat concerned about COVID as they go into the election in November.

BRIAN SOZZI: Tracie, this survey found that investors really don't care much about the China trade issue, which is interesting considering it has played out in a very public forum the past two years in the markets. Why do you think that's the case?

TRACIE MCMILLION: So I think that they're looking at its impact on the overall economy, and I think that that is what's most important to people is their own personal circumstances. And I would venture to guess that most investors feel like that is something that is not touching them personally, so they aren't as concerned about that as things like very personal issues of the economy and their employment tied to the economy, health care.

And, you know, I think it's interesting too that education is ranking so high, and I do wonder if there's a connection there between education and so many people staying at home now educating their children virtually. So I thought that was another interesting aspect. And certainly taxes are always front of mind because, again, that's a very personal issue.

ALEXIS CHRISTOFOROUS: For sure, and the survey definitely highlighting some interesting points here. Thanks so much. Tracie McMillion, head of global asset allocation at Wells Fargo.

TRACIE MCMILLION: Thank you.