In the third quarter of 2003, optimism declined among investors in most of the country, according to the UBS/Â鶹´«Ã½AV Index of Investor Optimism*. However, aggregated Index results from the fourth quarter confirm a renewal of optimism throughout the country, to a degree not seen since early 2002. The fourth-quarter outlook was sunniest in the South, followed by the West. Investor optimism also improved in the East and Midwest in the fourth quarter, although optimism in these regions still trails that in the South and West.
Southern Region
In the South, the nation's most optimistic region, the average overall Index of Investor Optimism score declined from 78 in the second quarter of 2003 to 69 in the third quarter. Bolstered by a surge in investor optimism about the national economy, the overall Index rose to 106 in the fourth quarter in that region, its highest point in two years.
The average score on the Index's Personal Dimension, which tracks investors' optimism about their own personal investment situations, dropped slightly between the second and third quarters among Southern investors, but improved 11 points to 70 in the fourth quarter -- also its highest rating since the first quarter of 2002. The average Economic Dimension, which measures optimism about the country's overall economic situation, followed a similar pattern, but jumped 26 points to 36 in the fourth quarter. This represents the highest score for the Economic Dimension in the South since the fourth quarter of 2000.
Western Region
The West was the only region to see an increase in the Index's overall average in the third quarter of 2003. That upward trend continued in the fourth quarter, driven by improvements along the Economic Dimension, reaching a quarterly average of 86.
Breaking that average down into components, the Personal Dimension in the West remained unchanged at 64, after an 11-point increase between the second and third quarters. The Economic Dimension, on the other hand, saw little movement between the second and third quarters, but increased 16 points to 22 in the fourth quarter.
Eastern Region
The East, which was significantly more negative overall than all the other regions in the third quarter of 2003, experienced the biggest quarterly increase in the Index's overall average -- from 35 to 78. In the fourth quarter, the overall Index in the East was at its highest point since the second quarter of 2002.
Furthermore, investors' optimism improved along both the Personal and Economic Dimensions. The Personal Dimension in the East fell from 46 to 38 between the second and third quarters, only to rebound to 56 in the fourth quarter. The Economic Dimension of the Index had dipped into negative territory (-3) in the third quarter, but climbed to 22 in the fourth.
Midwestern Region
After falling seven points between the second and third quarters of 2003 among Midwestern investors, the overall Index rebounded 28 points to 77 in the fourth quarter of 2003.
Rosier outlooks for the national economy and modest improvements in personal optimism were behind the better fourth-quarter numbers. In the Midwest, the Index's Personal Dimension climbed 11 points to 57 in the fourth quarter -- its highest average since the second quarter of 2002. The Economic Dimension of the Index had fallen from 6 to 3 between the second and third quarters of 2003, before increasing to 20 in the fourth quarter.
Bottom Line
Throughout the country, investors in the fourth quarter were more optimistic than they have been in at least 18 months. Southerners haven't been so positive about the economy since the Clinton administration, and although the East and the Midwest are still in the basement in terms of optimism, investors in those regions posted the strongest gains in the fourth quarter.
*Results are based on telephone interviews with more than 800 investors nationwide, aged 18 and older, conducted monthly since January 2000. For quarterly results based on these total samples, one can say with 95% confidence that the margin of sampling error is ±2 percentage points. Each region consisted of at least 495 interviews per quarter. For quarterly regional results based on these total samples, one can say with 95% confidence that the margin of sampling error is ±4 percentage points.
Â鶹´«Ã½AV identifies these states as "East": Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, Maryland, Delaware, West Virginia, and the District of Columbia
Â鶹´«Ã½AV identifies these states as "Midwest": Ohio, Michigan, Indiana, Illinois, Wisconsin, Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska, and Kansas
Â鶹´«Ã½AV identifies these states as "South": Virginia, North Carolina, South Carolina, Georgia, Florida, Kentucky, Tennessee, Alabama, Mississippi, Arkansas, Louisiana, Oklahoma, and Texas
Â鶹´«Ã½AV identifies these states as "West": Montana, Arizona, Colorado, Idaho, Wyoming, Utah, Nevada, New Mexico, California, Oregon, and Washington
