Economy Fades as Issue for Democrats on Falling Gasoline Prices

By Matthew Benjamin

Sept. 22 (Bloomberg) -- Plummeting gasoline prices and a buoyant stock market may be weakening the power of the economy as an issue for Democrats less than seven weeks before U.S. congressional elections.

A majority of Americans -- 54 percent -- say the U.S. economy is doing well, according to a new Bloomberg/Los Angeles Times poll. That's up 4 percentage points from the beginning of August, when the price of a gallon of gasoline was an average of 54 cents higher and the Standard & Poor's 500 stock index was 4 percent lower. President George W. Bush's approval ratings on handling the economy also rose.

Almost 1 in 3 poll respondents said lower gasoline prices have enabled them to spend more on other household items.

``If there's any way that voters link economic uncertainty with what they experience on a daily basis, it's through what they feel at the gas pump,'' said Amy Walter, an election analyst for the nonpartisan Cook Political Report in Washington.

Another issue some Democrats were aiming to capitalize on this year, unhappiness with pay and benefit policies at Wal-Mart Stores Inc., may not register with voters, according to the poll. By a margin of 38 percent to 31 percent, Americans said Wal-Mart, the nation's largest employer, is good for the U.S. economy.

About half the poll respondents said they disapprove of the way Bush is managing the economy, down from 59 percent at the beginning of August, while 43 percent now approve, compared with 38 percent then.

`Better Now'

Phyllis South, a retired teacher in Columbus, Ohio, said the drop in gasoline prices was the primary reason ``the economy is better now than it has been.''

The price of a gallon of regular gasoline averaged $3 on Aug. 1, according to the American Automobile Association. On Sept. 30, it fell to $2.46, just as the S&P 500 index approached a five-year high.

Like South, 54, who said she ``absolutely did not'' vote for Bush, Democratic voters are more upbeat on the economy, if only slightly. Democrats who said the economy is doing badly fell to 63 percent from 66 percent in early August.

The poll of 1,517 adults was taken Sept. 16 to Sept. 19 and had a margin of sampling error of plus or minus 3 percentage points.

Americans range from neutral to positive on the state of their own finances, according to the poll. Almost 2 in 5 called their financial situation good, while only 14 percent said it was bad. Almost half the respondents said ``in-between.''

Outpacing Incomes

That's even though more than half said their incomes haven't kept up with rising prices. Almost two-thirds of those with household incomes under $40,000 said prices were outpacing their incomes, while about two-thirds of those making more than $100,000 said they were keeping up. That supports other economic data indicating that income gains of recent years have skewed toward the wealthy.

``I'd still like to win the lottery, but we're doing okay,'' said Bill Souffrant, 67, of Fort Mill, South Carolina. The retired salesman, a Republican who works part time as a bookkeeper, said he feels comfortable financially because he saved enough for retirement and his investments are performing well.

Bucking the national trend of slowing home sales, Souffrant and his wife are about to buy a smaller, though equally expensive, house in a nearby retirement community. ``We're downsizing, but not financially,'' he said.

Home Values

Americans aren't generally worried about home values, according to the poll. More than half expect house prices in their neighborhoods to remain about the same six months from now. Among the rest of the respondents, more expect a rise in prices than a decline.

U.S. average home-price growth slowed to 1.17 percent during the second quarter from 3.65 percent during the same period a year earlier, the Office of Federal Housing Enterprise Oversight said in a Sept. 5 report. That's the biggest drop since the agency began keeping records in 1975.

Partly as a result of the cooling housing market, economists expect U.S. economic growth to slow to an annual rate of 2.6 percent in the final three months of 2006, according to a Bloomberg survey of economists, after growing 5.6 percent in the first quarter and 2.9 percent in the second.

Democrats have been hoping to use voter anxiety about the economy and anger at Wal-Mart to gain control of the House of Representatives, and possibly the Senate. They need a net gain of 15 seats in the House and six in the Senate to win control.

Under Attack

Democratic politicians have increasingly made Bentonville, Arkansas-based Wal-Mart, the world's largest retailer, a target of attacks during the past few months. In Connecticut, both Democratic Senate nominee Ned Lamont and Senator Joseph Lieberman, who lost to him in last month's primary and is now running as an independent, have assailed the company.

Democrats are trying to woo voters such as Patty Dailey, a sales manager and political independent in Indianapolis.

``Wal-Mart is taking advantage of their employees,'' said Dailey, 39, a former human-resources manager. ``They're a national leader on profits but not on providing benefits.''

Still, according to the poll, more voters agree with Bill Souffrant.

``On the whole, what Wal-Mart does is better than companies that have high prices and employ fewer people at higher wages,'' he said.

Low-income Americans view the giant retailer more favorably than do the wealthy. While 46 percent of those with household incomes above $100,000 said Wal-Mart is bad for the economy, only 27 percent of those earning less than $40,000 agreed.

About a quarter of respondents called high oil prices the biggest potential problem for the U.S. economy, making it the top threat. Unfair foreign competition was seen as the second-biggest danger, which may be some consolation to Democratic politicians, said Walter of the Cook report.

``There's still considerable anxiety that has bubbled up in the last few years about who we are as a country, what we're producing, and our ability to sustain economic growth in the face of competition from overseas,'' Walter said.

To contact the reporter on this story: Matthew Benjamin in Washington at mbenjamin2@bloomberg.net

Last Updated: September 21, 2006 20:00 EDT

		Email this article Printer friendly format