The doom and gloomers are growing in numbers.
On a day when the ADP employment report for May showed slower job growth than expected and the ISM Manufacturing Index plummeted in May, at least two new reports were released indicating the business community and investors are becoming increasingly nervous about the future.
A global survey of 800 institutional investors and corporate executives found that 86 percent believe there are significant opportunities for growth in financial markets. However, more than half (58 percent) think that there are major downside risks preventing them from taking advantage of opportunities, according to a BNY Mellon-sponsored survey conducted by the Economist Intelligence Unit.
"The survey shows that while a strong consensus among global investors has emerged on opportunities for growth, uncertainty caused by political, social and economic factors has led to inactivity and maintaining the status quo across a meaningful percentage of the investor base," says James Palermo, vice chairman and CEO of Global Client Management at BNY Mellon.
Most of the survey respondents agree that the global economic recovery will continue, but there is disagreement over the pace of that improvement. Just under one-quarter think that the recovery will pick up momentum over the next 12 months, but almost half say that the pace of recovery will slow over that timeframe. This is likely to reflect concerns about recent shocks, including the political unrest in the Middle East and the earthquake in Japan, as well as fears about rising inflation, particularly in emerging markets, according to BNY Mellon.
A majority of investors also said that default of a Eurozone country is looking increasingly likely.
"A common theme from the survey is a lack of confidence in multilateral decision-making," the survey states. "Only a small minority of investors expect progress on concluding the Doha round of trade negotiations, while there are similarly low expectations for agreement on a global accord to replace the Kyoto Protocol, or a globally agreed solution to the "too-big-to-fail" problem in banking."
Meanwhile, economist David Levy says in his just-published May Levy Forecast that US corporate profits are "undergoing a peaking process" that will mean falling profits by the end of 2011. "Tightening federal fiscal policy, state and local cutbacks, home prices falling to one new low after another, and growing strains on household budgets from higher food and energy prices all presage downward pressures on profits during the second half and, especially, in 2012," Levy writes.
Levy, chairman of the independent Jerome Levy Forecasting Center believes the world economy appears increasingly troubled, calling Europe "a train wreck waiting to happen."
Of the US economy, Levy writes that in the second half of 2011, "Some key profit sources will decline or lose momentum." Among them: Soaring inventory investment will diminish, Capital spending and exports will likely decelerate, State and local government deficit cuts will deepen as many municipalities start new fiscal years, and The saving rate will also likely rise, cutting into profits.