Investors haven't been this bearish on the economy for 30 years

A new survey shows investors haven’t felt this dour on the economy in decades, another sign of how heavily Donald Trump’s trade war is weighing on sentiment.

As part of its weekly Global Fund Manager survey, Bank of America took the pulse of 164 fund managers with $386 billion of assets under management.

As shown by the dark blue in the chart below, global growth expectations have fallen to a 30-year low. The light blue line sees a similar — although not quite as extreme — decline in S&P 500 expectations.

Pessimism around equities specifically was seen in another measure surveyed by BofA: the number of participants planning to trim exposure to US stocks. As shown below, this fell to a record low.

The sharp decline in expectations reflects how hard investors have been hit by Trump’s Liberation Day tariffs, which helped spark the worst stock sell-off since the pandemic after Trump officially rolled out the tariffs in early April.

The major indexes have clawed back some of the losses since Trump issued a 90-day pause on most of his tariffs. Still, the S&P 500 is down 12% from its peak in mid-February.

Tariffs have worried investors on two fronts. First, markets are antsy about the impact import duties could have on US growth, with chatter about a potential recession making the rounds on Wall Street in recent weeks.

Second, traders are worried about the inflationary impact of tariffs, as companies could pass tariff-related price increases onto consumers. Fears of higher inflation are also raising concerns about stagflation, a nightmare scenario for the economy that involves sluggish growth and stubbornly high prices.

80% of fund managers said they believed the biggest tail risk to markets was the trade war triggering a global recession, according to the BofA survey. That’s the most concentrated investors have been on a tail risk in 15 years, the bank added.

Meanwhile, 90% of fund managers said they expected to see stagflation in the global economy over the next 12 months. That’s the highest stagflation fears have been since 2022.

Trade war pressures don’t look like they’ll lighten up anytime soon though. The US is negotiating with dozens of countries on trade during the 90-day reprieve. Meanwhile, the White House has threatened to impose 245% tariff on imports from China as tensions escalate between the two nations.