Investor behavior

Vanguard investor pulse: Anxiety and cash needs on the rise

November 22, 2022

Vanguard Investor Expectations Survey
The stock market: Investors are expecting short-term pain

Optimism about stock returns in the short run dropped to a five-year low

One line in the chart shows the average stock market return that investors expect to see over the coming 12 months. The data are shown on an every-other-month basis from February 2017 through October 2022. It was at 0.6% in October 2022, down from 3.4% two months earlier.  Another line in the chart shows the average stock market return investors expect over the coming 10 years. The data are shown on an every-other-month basis from February 2017 through October 2022 and are steadier than for the three-year timeframe. It was at 7.2% in October 2022, up only slightly from 7.1% two months earlier.
The economy: Short-term growth expectations remain relatively neutral

The short-term/long-term growth expectation gap widened

One line in the chart shows the average annual GDP growth rate investors expect to see over the coming three years. The data are shown on an every-other-month basis from February 2017 through October 2022. It was at 2.7% in October 2022, unchanged from the reading two months earlier. Another line in the chart shows the average annual GDP growth rate investors expect to see over the coming 10 years. The data are shown on an every-other-month basis from February 2017 through October 2022. It was at 4.2% in October 2022, up from 3.8% two months earlier.
The Fear and Doubt Index: Investors see an increased chance of extreme events

The Fear and Doubt Index is near five-year highs

Two lines show data on an every-other-month basis from February 2017 through October 2022.  One line in the chart shows the probability of a stock market disaster, according to investors, over the coming three years. It was 8.2% in October 2022, up from 6.0% two months earlier. Another line in the chart shows the probability of an economic disaster, according to investors, over the coming three years. This line tracks the line for a stock market disaster fairly closely and was 8.0% in October 2021, up from 7.2% two months earlier.
Retirement loan and withdrawal behavior
Signs of increasing financial strain among U.S. workers

Households’ need for cash is especially evident in all-time highs for hardship withdrawals

Three lines show data from June 2004 through October 2022.  One line shows the share of plan participants who have taken out loans from their 401(k) accounts. It has increased from levels seen in 2021 to 0.9% of participants in October 2022. One line shows the share of plan participants who have made nonhardship withdrawals from their 401(k) accounts. It has increased from levels seen in 2021 to 0.9% of participants in October 2022. One line shows the share of plan participants who have made hardship withdrawals from their 401(k) accounts. It has increased more sharply from levels seen in 2021 to 0.5% of participants in October 2022.
About the Vanguard Investor Expectations Survey
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Contributors:

Xiao Xu
Andy Reed
Fiona Greig
Vanguard Information and Insights

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