Investors grew increasingly more skeptical about the overall U.S. economy in August because of troubles boiling in the subprime real estate market and growing concerns over energy prices, a new report from the UBS/Gallup Index of Investor Optimism says.

The UBS/Gallup Index of Investor Optimism says investor optimism dropped 14 points to an index of 73 in August, which is the poll’s third consecutive drop this year and the lowest level it has reached since August of 2006.
“The high-profile troubles in the real estate market, particularly the subprime sector, coupled with ongoing energy price concerns are fueling investor skepticism about the U.S. economy,” said Mike Ryan, head of UBS Wealth Management Research, Americas. “Meanwhile, signs of an emerging consumer credit crunch and growing fears of a recession are weighing heavily on investor sentiments.”
Many of the skeptics have formed less-than-favorable opinions about the marketplace because of the nation’s subprime troubles, the report says.
“Investors fear that problems in the subprime mortgage market will spread, with 59-percent feeling there will be a spillover into the overall mortgage market, while only 28-percent feel it will be contained. Investors felt that the credit crunch is squeezing even tighter,” the report concludes.
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