Economic Outlook

An overwhelming 92 percent of advisors surveyed in January 2009 believe U.S. unemployment will increase in the next six months, according to Schwab's Independent Advisor Outlook Study. In the same study, 69 percent believe the housing market will continue to soften and two-thirds foresee an increase in consumer savings.

Only 30 percent of advisors believe inflation will increase, down sharply from 79 percent just six months ago. The survey reflected little confidence in consumer spending, and only 10 percent of advisors surveyed believe the Federal Reserve Board will raise interest rates.

Opinions differed about the duration of the current recession. Less than half of advisors (44%) surveyed believe the recession will end during 2009 while 41 percent foresee an end by December 2010.

LENGTH OF TIME EXPECT CURRENT RECESSION TO LAST

Q4G: How long do you expect the current economic recession to last?
Base = Advisors responding; Jan ’09 = 1220   (Excludes "Don’t know" (n= 20))

Advisors are divided about how long it will take their clients to recoup market losses. Nearly 55 percent of advisors surveyed believe recovery will not occur until December 2011 while more than a third extend that period until December 2014. Nearly 1 in 10 advisors surveyed believe it may take 10 years or more to recover from the steep declines in market valuations.

ESTIMATED LENGTH OF TIME WILL TAKE CLIENTS TO RECOUP PORTFOLIO LOSSES

Q22D: How long would you estimate it could take for your clients to recoup the losses in their portfolios, compared to the values of their portfolios of September 1, 2008?
Base = Advisors responding; Jan ‘09 = 1203  (Excludes "Don’t know" (n = 37))

(0309-8000)