Three recurring laments heard in the corridors of the Marriner Eccles building are why, with stocks at record highs after levitating in more or less a straight line for the past 7 years, i) has the economic recovery not been stronger, ii) has inflation not been higher, and iii) have consumer spending and sentiment never really recovered. A just released Gallup survey may have the answer.

According to a poll of over 1,000 American adults, even with the Dow Jones industrial average near its record high, only slightly more than half of Americans (52%) say they currently have money in the stock market, matching the lowest ownership rate in Gallup’s 19-year trend

The current figure is down slightly from 2014 and 2015, and continues a secular decline that started in 2007.

But most troubling is that the generation which is expected to take over the stock ownership reins when the Baby Boomers start selling their equity holders, middle-class adults, especially those younger than 35, are the least likely to invest. As Gallup notes, “although Americans in all income groups are less likely to have stock investments now than before the Great Recession, middle-class Americans have been the most likely to flee the market

Gallup’s conclusion: “Fewer Americans — particularly those in middle-income families — are benefiting from the recent gains in stock values than would have been the case a decade ago.”

Which is the worst possible news for Janet Yellen, because no matter how hard the Fed works to prop and boost the market, nearly half of Americans no longer have any faith left in what has become clear to most is just a tool to push some crooked, crony-capitalist policy, but mostly to make the richest even richer.

More details from Gallup:

Just Over Half of Americans Own Stocks, Matching Record Low

In 2007, nearly two in three American adults (65%) reported investing in the stock market, the high in Gallup’s selected trend on this question for April of each year. But this percentage shrank each year from 2008 to 2013 as the effects of the Great Recession and big market losses took their toll on Americans’ sense of job security, confidence in the economy and financial means to invest — as well as their general confidence in stocks as a place to invest their money.

Though the Dow Jones industrial average has made great gains since bottoming out in 2009, Americans’ stock ownership has yet to recover to the level reported prior to the recession.

There were modest gains in the percentage of Americans with stock investments in 2014 and 2015, but reported ownership fell back this year, possibly because of the Dow’s tumultuous performance over the past year. Americans’ views of stocks as the best long-term investment also dipped this year.

Middle-Class Americans Most Likely to Leave Market

Although Americans in all income groups are less likely to have stock investments now than before the Great Recession, middle-class Americans have been the most likely to flee the market. Nearly three in four middle-class Americans, with annual household incomes ranging from $30,000 to $74,999, said they invested money in the stock market in 2007. Today, only half report having stock investments. This 22-percentage-point drop is more than double the changes seen in stock investing among higher and lower income groups.

Adults younger than 35 are also less likely to invest since the recession. Slightly more than half (52%) said they invested money in the stock market in 2007. But nearly a decade later, fewer than four in 10 report investing in stocks. The 14-point dip for this group is the largest among all age groups; however, Americans aged 35 to 54 and those aged 55 and older each saw roughly double-digit decreases. Although many financial advisers say that young people should invest as much money as possible to maximize their long-term returns, the majority of 18- to 34-year-olds are not heeding that advice. Young adults are more likely to save their money or invest in real estate.

Bottom Line

While a slight majority of Americans report investing their money in the stock market, it’s a far cry from pre-recession levels that spanned 58% to 65%. Confidence in the stock market and levels of financial literacy have clearly suffered in recent years, and investment rates lag significantly behind the overall rebound the market has made.

While Americans are likely still recovering from the fallout of the financial crisis, the market’s behavior over the past year hasn’t helped regain their confidence. The Dow’s major drops in August and September of last year and again in January and February 2016 are now behind investors, but the unpredictability of its trajectory may have hampered the plans of potential investors to join them in the market. Fewer Americans — particularly those in middle-income families — are benefiting from the recent gains in stock values than would have been the case a decade ago.

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