CARES Act Improving Short-Term Outlook for Two out of Five Investors

This week’s Sentiment Survey special question asked AAII members how the coronavirus aid legislation (the CARES Act) is impacting their economic expectations. Two out of five (40%) of respondents say that the aid package is improving their short-term outlook, however, their long-run outlook is still pessimistic. Many within this group believe that the economy will require more aid in the future and that a greater amount should be allocated to small businesses/families. In contrast, 27% of respondents state that their economic outlook has deteriorated following the aid package announcement. Rationale includes unsustainable debt levels and expectations of high inflation in the years to come.

Additionally, 19% of respondents state that the coronavirus aid package has positively affected their economic expectations while 13% of respondents state that the package has had no effect on their outlook thus far.

Here is a sampling of the responses: 

• “I think it is a band-aid and we will need lots more before this is over. What really concerns me is the national debt.”
• “It will help slow the economic downturn but won’t prevent a recession. Recession may be milder as a result of the aid package. I expect further aid to come for specific segments of the economy as we get close to the election.”
• “Mixed. The aid to individuals is necessary. The aid to big corporations and industry groups will be misused and will fill the pockets of powerful but greedy folks who will enjoy windfall profits instead of aiding the economy.”
• “Worry that the financial ‘cure’ may prove worse than the disease.”

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