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Investor optimism has once again disappeared in the United States. From a peak Wells Fargo/Gallup Investor and Retirement Optimism reading of 178 in 2000, the index hit an all-time low of -64 in 2009 before rising to around 40 earlier this year. The November 2012 reading is back down to -8, according to Gallup.

The research firm lays the blame squarely at the foot of the fiscal cliff. If a solution is not negotiated in time to avoid tumbling off the cliff, some 70% of respondents think the U.S. will enter another period of recession.

The largest negative impacts on the U.S. investment climate are a “politically divided federal government” and the federal budget deficit. Some 69% of respondents say that both issues are “hurting [the U.S. investment climate] a lot.” Other major impacts are unemployment (67% say it is hurting a lot), the global economic slowdown (63%), the price of energy (50%) and the European debt crisis (46%).

The top priority for U.S. policy makers is job creation, according to 89% of respondents, followed by 82% who believe addressing the federal deficit and debt is a top priority.

The impasse over the debt ceiling in the summer of 2011 pushed the index to a reading of -45, so by comparison this month’s reading of -8 is far better. But, as Gallup notes, there is not much time left to avoid the spending cuts and tax hikes that will come if a resolution to the fiscal cliff is not reached. It is a pretty safe guess that optimism will fall further if the U.S. falls off the cliff.

Paul Ausick