Two years after the official start of the recovery, the American people remain pessimistic about their current economic circumstances and longer-term prospects.
Fewer than a quarter of people see signs of improvement in the economy, and two-thirds say they believe the country is on the wrong track overall, according to a Bloomberg National Poll conducted June 17-20.
“Gas prices are higher, grocery prices are higher, transportation prices are higher,” says poll respondent Ronda Brockway, 54, an insurance company manager and political independent who lives in a suburb of Harrisburg, Pennsylvania. “The jobs situation nationwide is very poor.”
By a 44 percent to 34 percent margin, Americans say they believe they are worse off than when President Barack Obama took office in early 2009, when the U.S. was in the depths of a recession compounded by the September 2008 financial crisis and the economy was losing as many as 820,000 jobs a month.
The gloom covers the immediate future, with fewer than 1 in 10 people expecting unemployment to return to pre-recession levels within the next two years, and it extends to the next generation. More than half of respondents say their children are destined to have a lower standard of living than they do, upending a traditional touchstone of the American Dream.
Higher Than Reagan
The portion of Americans who say they believe the U.S. is on the wrong track is higher than it was at any point during Ronald Reagan’s presidency, when unemployment peaked at 10.8 percent after the 1981-82 recession, according to an ABC News/Washington Post poll. The ABC poll showed the wrong-track number during Reagan’s first term peaking at 57 percent in October 1982. The Bloomberg poll shows 66 percent of Americans think the U.S. is going in the wrong direction now.
As the public grasps for solutions, the Republican Party is breaking through in the message war on the budget and economy. A majority of Americans say job growth would best be revived with prescriptions favored by the party: cuts in government spending and taxes, the Bloomberg Poll shows. Even 40 percent of Democrats share that view.
“Unless you limit the actual money coming in to the government and give businesses a break, I don’t think you’re going to have a bounce-back in the economy,” says poll respondent Michael Jefferys, 37, a business analyst for a building supply manufacturer. The economy “is at a teetering point: Depending on what changes are made, it could take a dramatic fall or start to revive,” says Jefferys, a political independent who lives in Pitman, New Jersey.
Even so, the public remains ambivalent about the Republican Party’s economic stewardship. Asked to rate Obama’s vision for the economy against that of the Republicans, poll respondents favor the president’s by 40 percent to 37 percent, though that is a deterioration from a 12-percentage-point advantage Obama maintained three months ago.
The souring public mood comes as the economy has been buffeted by a heightened sense of crisis over European sovereign debt, manufacturing supply disruptions in the aftermath of the Japanese earthquake, and rising gasoline prices during the early months of the year.
Following a string of disappointing data in recent weeks, a number of economists have lowered their growth forecasts for the current quarter and remainder of the year. The median forecast for second-quarter growth among economists surveyed by Bloomberg dropped from 3.3 percent in May to 2.3 percent in June.
The buying power of Americans’ wages is declining at the fastest rate since 2008, with real average hourly earnings down 1.6 percent during the 12 months ended in May. Job growth also has slowed, and the unemployment rate in May reached 9.1 percent, the highest level so far this year.
Other data point to progress over the past two years, including seven consecutive quarters of economic growth and a more than 50 percent rise in the Standard & Poor’s 500 stock index during Obama’s presidency. The National Bureau of Economic Research officially dated the end of the recession to June 2009.
Though Americans rate unemployment and the economy as a greater concern than the deficit and government spending, the issues are now closely connected. Sixty-five percent of respondents say they believe the size of the federal deficit is “a major reason” the jobless rate hasn’t dropped significantly.
“In this day and age we all have to spend less, and that includes the government itself,” says poll respondent Carolyn Beller, 66, a retired financial-services worker and independent voter in Hull, Massachusetts. “We all have to put a stop to this nonsense of spending.”
Majorities also cite as major reasons for weak job growth the outsourcing of U.S. companies’ production to foreign facilities, structural changes in the economy and uncertainty about government regulations and taxes. Fewer than half cite failures of Obama’s economic stimulus or cuts in government spending as contributing reasons. Fifty-eight percent say the economy needs time to heal in the wake of the financial crisis.
Republican criticism of the federal budget growth has gained traction with the public. Fifty-five percent of poll respondents say cuts in spending and taxes would be more likely to bring down unemployment than would maintaining or increasing government spending, as Obama did in his 2009 stimulus package.
Even with their concerns about the deficit, Americans aren’t ready to pay more in taxes: More than 6 of 10 say they are unwilling to do so, even as 77 percent say it’s inevitable taxes will rise as a result of a deal to curb the deficit.
The public shows more openness to reducing or eliminating popular tax breaks, if accompanied by lower rates, an approach advocated by leaders of the president’s bipartisan deficit commission. Still, Americans are divided over giving up some of the breaks and oppose reductions in others.
A 49 percent to 45 percent plurality would accept a lowering of the mortgage tax deduction. The country is almost evenly split on cutting tax benefits for education expenses, with 49 percent favoring that and 48 percent opposed.
The divisions are also close on other deductions: 48 percent of Americans favor reducing tax breaks for charitable contributions compared with 47 percent who are opposed; 46 percent favor lower deductions for child-care expenses compared with 50 percent who don’t.
Larger margins oppose rollbacks of tax laws that encourage employee benefits. By a margin of 51 percent to 40 percent, poll respondents oppose a reduction in the exclusion of employer-paid health insurance from taxable income. Lower tax breaks for 401(k) contributions are opposed by 54 percent with 39 percent in favor.
Support for limiting the tax breaks is strongest among low-income Americans, who are less likely to benefit from the deductions because fewer of them itemize their income tax returns.
The poll of 1,000 adults was conducted by Selzer & Co., a Des Moines, Iowa-based firm. It has a margin of error of plus or minus 3.1 percentage points.