Wall Street investors are worrying like it's April 2020

• Fund managers surveyed by Bank of America are increasingly worried about the global recovery.
• Only 27% of fund managers expect growth to improve this year. That's the smallest share since April 2020.
• On the bright side, managers expect inflation to cool and for the US to spend more on infrastructure.

It's not lockdown time again, but to Wall Street investors it might as well be.

Hopes for global economic growth cratered through the summer as the Delta variant drove case counts higher and data signaled the US recovery hit its peak. Just 27% of fund managers on net expect growth to improve over the next 12 months, Bank of America Research said in a Tuesday note. That's the lowest share since April 2020, when pandemic lockdowns first rocked the US economy.

The share is also down from the 91% peak seen as recently as March. Conversely, the net percentage of fund managers expecting the global economy to get "a little weaker" rose to 28% in August from 21%. That's the highest since March 2020.

The survey's results come from 257 fund managers questioned from August 6 to August 12, according to the note.

They were surveyed before US retail sales data revealed that spending fell more than expected in July as COVID cases rebounded from their summer lows. While retail spending is still running well above the pre-crisis trend, the slowdown is more evidence that investors' fears are founded, as the country's largest economic engine may be shifting into a lower gear.

All signs point to slowdown

Managers also see the global recovery slowing from the summer's encouraging pace. Expectations for above-trend growth and inflation sank in the latest survey to 69% from the June peak of 76%.

The survey also took place before the University of Michigan's consumer sentiment index plunged to its lowest point since 2011 in early August, with Americans citing concerns around unemployment and inflation.

In addition, the survey period ended days before the Taliban took over Kabul, Afghanistan, prompting rapid exits for US diplomats and a new reckoning with the US's decades-long presence in the region. While that event hasn't yet had an appreciable effect on economic growth, it contributed to the stock market's decline earlier in the week and could cut into President Joe Biden's political capital, and therefore US policymakers' efforts to pass additional economic relief.

Some bright spots amid the gloom

Fund managers' outlooks weren't all bad. The net percentage of managers bracing for higher inflation slid to just 4% in early August, down from the April high of 93%. Risk expectations rolled over from their spring peak as well, signaling markets won't repeat the volatile swings of early 2020.

Respondents also see the US spending more on infrastructure than last expected. The bipartisan $1 trillion infrastructure package was approved by the Senate last week and is expected to win approval in the House before the end of the year. Democrats also plan to pass a separate measure through the budget reconciliation process, skirting Republican support to spend big on education and eldercare. That second package has a preliminary price tag of $3.5 trillion, but opposition from some moderate Democrats stands to cut that price tag.

Fund managers now expect the two-bill package to reach roughly $1.7 trillion, according to BofA. That's up from $1.4 trillion in July. The share of those expecting a package between $2 trillion and $3 trillion also doubled from last month.

Biden has repeatedly characterized such spending as an "investment" in the country's future growth. Treasury Secretary Janet Yellen separately urged lawmakers to spend big on infrastructure while rates are low, saying in May the country can expect a "big return" from such a package.