American investors are bracing for short-term pain due to tariffs but remain optimistic about their prospects for the long haul. That’s according to recent research conducted by the U.S. subsidiary of Big Four accounting firm KPMG.
Released Wednesday, a pair of surveys show near-term optimism waning among 300 institutional investors based in the U.S. To better understand investor sentiment before and after the Trump administration’s tariff announcements, the firm queried investors once in January and February and again in April. Across those surveys, there was a 12-point decline in investor optimism, according to KPMG.
KPMG officials said the United States’ tariff regime is “significantly influencing investment decisions.”
When asked about the prospects for near-term economic growth in the January and February survey, 96% of respondents said they were either very optimistic or somewhat optimistic. In April, that figure dropped to 84%. KPMG defined “near-term” as over the next 18 months.
Notably, investor optimism for the longer term crept up between the two surveys: In the January and February survey, 84% said they were very optimistic or somewhat optimistic about growth prospects beyond 18 months. That number grew to 92% when investors were asked again in April.
The Trump administration’s stated goal in increasing levies on foreign-made goods has been to bring manufacturing back to the United States. Per KPMG’s research, investors appear ready to make that shift.
“Tariffs — both the downstream impacts and mitigation of them — are challenging institutional investors to rethink their investment strategies and risk appetite,” said Tarek Ebeid, private leader and partner in charge of KPMG US’ Northern California audit practice. “While they maintain an optimistic view of long-term growth, in the near term, their focus has shifted to domestic companies in industries experiencing less uncertainty due to the current market environment.”
Investors also don’t expect the current economic uncertainty to last long: Four in 10 respondents think it will be limited to six months to a year, while one in four expect it to last more than two years.
Still, researchers report nearly half (47%) of respondents anticipate an economic recession in the next 18 months. (For what it’s worth, in a May survey of finance leaders, one in five believe the nation has already entered a recession.)
KPMG surveyed investors working in asset management (46% of respondents), venture capital (29%) and private equity (25%). There were notable differences in confidence among the three investor groups. Among VC respondents, 95% said they’re optimistic for economic growth beyond 18 months. That was the highest level among all the respondents, KPMG noted.
“There is a reason that these VC firms continue to receive significant LP funding — another reason for their optimism,” Conor Moore, global and U.S. head of KPMG Private Enterprise, told CFO.com in an email. “Additionally, the next 36 months may very well see the greatest technology changes ever over such a short period of time —a prime opportunity for these venture firms.”
