Personal Finance

Nervous investors cite Washington politics as their top cause for concern

Key Points
  • Investors were already feeling bearish about the economy and nervous about Washington politics even before the shutdown began, according to a recent survey from Charles Schwab.
  • Most individuals surveyed expect the next economic downturn could come as soon as this year or within the next several years.
  • Those sentiments come as politicians work to reconcile their differences and avoid another government shutdown in three weeks.
President Donald J. Trump debates with House Minority Leader Nancy Pelosi, D-Calif., as Vice President Mike Pence listens during a meeting in the Oval Office of White House on Tuesday, Dec. 11, 2018 in Washington, DC.
Jabin Botsford | The Washington Post | Getty Images

More investors are feeling jittery about the market. And their No. 1 concern is the political landscape in Washington.

That's according to the latest retail investor sentiment report released by Charles Schwab. The results are based on an online survey conducted in December, before the partial federal shutdown, which began on Dec. 22 and lasted for 35 days.

Lawmakers reached a deal on Friday to reopen the government until Feb. 15. President Donald Trump said over the weekend that another shutdown is "certainly an option."

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President Trump: Another shutdown is 'certainly an option'

Schwab's survey found that 52 percent of investors are feeling bearish, versus 41 percent a year ago.

Politics in Washington was the foremost concern cited by those surveyed, at 28 percent. That was followed by uncertainty due to market volatility, 12 percent; fears about a coming correction, 12 percent; and geopolitical or global macroeconomic issues, 11 percent.

Investors ages 40 through 55 and those who are retired are the most bearish, according to the survey.

And almost a third expect the next economic downturn will happen in the next year, as shown in the chart from Schwab below.

Next downturn 192801 Konish EC

Thirty-nine percent of investors think the new Congress will impact their investment strategy.

New Congress 190128 Konish EC

The sectors investors currently favor most include information technology, communications and health care, the survey found.

Schwab's survey included 861 of the firm's retail clients who each had at least $2,000 invested.

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