Monday, July 26, 2004
The Business Review

Affluent Americans are more optimistic about the overall state of the economy than they have been in nearly two years, but concerns about Iraq, rising energy prices and a perceived real estate bubble continue.

This is according to the latest McDonald Financial Group Affluent Consumer Confidence Index, released July 26. McDonald Financial, the private banking and investment arm of KeyCorp, has conducted the survey for seven consecutive quarters. The survey defines affluent individuals as those with personal income of $150,000 or more and/or investable assets of $500,000 or more.

The overall confidence index for July was 61 out of 100, a 7 percent increase since the last survey in April. The index has improved nearly 39 percent since July 2003.

However, the survey also shows that the affluent are holding back on spending and investing. Their reasons are different than in the previous quarter, when most cited unemployment, the national deficit, the stock market and terrorism as their main concerns. This time, the situation in Iraq was the primary issue. In fact, in a reversal from last quarter, the affluent said the war, and not the economy, will be the defining issue of the presidential election.

Additionally, 69 percent of survey respondents said they were concerned about rising gas prices and 56 percent said they believe there is a housing bubble in America today. Another 40 percent said the recent interest rate hikes will lead to a bursting of that bubble. However, most agree that the rate hikes are appropriate and a sign of economic strength.

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