Advisers See Higher S&P 500

However, their sense of the next six months for other economic indicators is mixed.

Although predicting an increase in the S&P 500 over the next six months, advisers forecasts on inflation, the housing market and consumer spending fall short of optimistic. According to the Independent Advisor Outlook Study by Schwab Institutional, completed in January 2007, well before any of the significant sell-offs seen over the last month, advisers are restrained in their optimism for 2007.

While 78% of about 1,400 financial advisory firm employees expect the S&P 500 to go up over the next six months, only 8% of them expect that increase to break 10%. Ten percent of advisors expect the index to see no change, 10% predict a drop of less than 10% and 2% of advisers foresee a decrease of more than 10% over the same period.

Advisers’ predictions on other economic indicators are:

  • 71% say the housing market will likely weaken, compared to 15% who disagree
  • 45% predict an increase in inflation, compared to one-quarter who disagree;
  • 41% expect a decline in the U.S. deficit, while about the same amount (43%) predict a hike;
  • 40% say consumer spending will increase, 29% foresee a decrease;
  • 33% predict that unemployment will increase, while the same amount expects a decline.