Americans Are Becoming More Optimistic About the Economy

With COVID-19 vaccinations taking hold across the country, Americans are becoming more optimistic about the economy, the stock market and their own personal finances, according to Charles Schwab’s 2021 “ Modern Wealth Survey” of 1,000 people.

More than 60% said they are optimistic about the stock market, and more than half feel positive about the U.S. job market (54%), economy (54%) and the country’s role as a global economic power (56%).

Furthermore, 74% of Americans are optimistic about U.S. technological innovations, and 56% have a positive outlook on the U.S. health care system.

Forty-seven percent of Americans are hoping to get back to living and spending like they were before the COVID-19 pandemic hit the country, while 24% say they would like to indulge even more to make up for lost time. Americans are dreaming the most about traveling (40%), socializing (30%), going on a vacation (24%), dining out at a fancy restaurant (21%) and hosting a party (15%).

“While COVID-19 upended nearly every corner of American life, many are starting to see the light at the end of the tunnel and are ready for a reset,” says Charles Schwab Senior Executive Vice President and Head of Investor Services Jonathan Craig. “They plan to prioritize experiences and treat themselves after living constrained lives amid restrictions, quarantines and illnesses. But we’re also seeing a healthy balance—even as many people are eager to get out to spend, they also want to nurture newfound, healthy savings and investing habits developed over the last year, and it seems that will be an ongoing marker of this next chapter.”

Sixty-four percent of Americans characterized themselves as savers in 2020, as opposed to spenders, and 80% hope to be bigger savers in the upcoming year. When it comes to this year, 45% intend to save more money, 34% intend to reduce their debt and 28% hope to build an emergency fund.

More than half of those surveyed said they were financially impacted by the pandemic, with 31% of those saying it strained their finances, 26% saying they were given a salary cut or reduced hours and 20% saying they were laid off or furloughed.

Looking forward, the majority of Americans (68%) say they have reprioritized what matters to them. Sixty-nine percent of those say mental health is more important than it was before, followed by relationships (57%), financial health (54%) and physical health (39%).

“The past year has, of course, caused Americans to focus on their health—in particular their mental health—along with the health of their relationships,” says Rob Williams, vice president of financial planning at Charles Schwab. “But the pandemic and the significant impact it had on the economy and stock market also taught us a valuable, and in many cases difficult, lesson about the importance of financial health and preparedness, including the importance of having a plan and emergency savings.”

Americans have also tamped down what they think it takes to be wealthy. Last year, they said it would take a net worth of $2.6 million to be considered wealthy. In 2021, they have lowered this down to $1.9 million. Last year , Americans said it would take an average net worth of $1.75 million to be financially happy. This year, it is just $1.1 million. They also lowered the amount they said it would take to be financially comfortable from an average net worth of $934,000 in 2020 to $624,000 this year.

The survey also found that 54% of those who have a written financial plan feel very confident about reaching their financial goals. For those who don’t have a written financial plan, just 18% share this sentiment.

Those with a plan also maintain healthier money habits when it comes to saving and investing. They feel financially stable (65% versus 40%), have an emergency fund (65% versus 33%), either never carry a credit card balance or have no debt (47% versus 29%), consider their risk tolerance when investing (80% versus 51%), are aware of fees and investment costs (71% versus 45%), and regularly rebalance their portfolio (87% versus 63%).

The survey also discovered that only 33% of Americans have a written financial plan. Among those who don’t have one, 42% say it is because they don’t think they have enough money to merit having one. Twenty-two percent say it’s too complicated, and 19% say they don’t have enough time to develop one.

“For those seeking to shore up their financial futures, investing, financial advice and financial planning have never been more accessible,” Williams continues. “At Schwab, we talk about the importance of having a plan at times of significant change or transition in life—like getting married, changing careers or losing a loved one. With the pandemic, we have all collectively experienced a major life event, so it’s particularly important to take the time to take the time to create a plan to help ensure your finances are on track and be ready for whatever comes next in your life. We have spent so much of the last year focusing on getting through today, but we’re now seeing an opportunity to look ahead and plan for tomorrow.”

A similar survey, by Bank of America, conducted among 200 institutional investors in April, found that the vaccine rollouts have made them less concerned about the impact of the virus on the markets. Instead, 32% say they are most worried about interest rates and the bond market, followed by inflation (27%) and higher taxes (15%).

Earlier this spring, Anthony Saglimbene, a global market strategist at Ameriprise Financial, echoed these sentiments, saying he foresees stronger growth for the economy in the next six to 18 months, thanks to vaccination efforts and a return to pre-COVID-19 activities. In fact, he said at the time that he expected corporate profits, economic growth and asset prices all taking a turn for the better. “With the backdrop of more vaccines, greater return to regular activity and higher growth or profits, that has historically been a very good environment for asset prices.”