Wednesday, December 17, 2008

Recent Poll Shows that the Consumer May Be Catching on to the Severity of the Situation

The article below gives the results of a monthly poll indicating that the consumer just might be catching on as to the severity of the economic situation. I contrast this with a poll taken in Q2 that indicated that 62% of respondents thought their homes had appreciated in the last year even though 77% of homes depreciated in value. Until the consumer catches on to the current economic situation the normal market clearing forces will not be able to take hold. By the way, I included the political portion of the article to give an indication of just how poorly the current Congress and President are viewed. I point this out to indicate that it is hard to lead if one is not well regarded. Text in bold is my emphasis. From Yahoo News (that should translate in your mind to Reuters):

A recession-mired economy and growing job insecurity have shaken American confidence in the future despite an upbeat view of President-elect Barack Obama's performance, according to a Reuters/Zogby poll released on Wednesday.

The Reuters/Zogby Index, which measures the mood of the country, dipped to 90.5 in December from 93.3 in November as seven of the 10 measures of public opinion used in the index declined.

Americans are feeling less secure in their jobs and more worried about the country's direction in the midst of a year-old recession and signs of widespread economic distress in nearly every sector, the poll found.

The sagging public mood returned after a burst of optimism last month, when Obama was elected to the White House on promises of changing the status quo and transforming the Washington political culture, pollster John Zogby said.

"The glow of the election has worn off a bit," Zogby said. "People are gearing up for what they know and what the president-elect has told them -- things are going to get worse."

Obama, who will take over from President George W. Bush on January 20, earned positive marks from 65 percent of the poll's respondents for his early performance in naming Cabinet members and gearing up to tackle the economic crisis.

In contrast, Bush earned positive job reviews from 24 percent in the poll, slightly higher than the record Zogby-poll low of 21 percent in October. Bush, architect of the unpopular Iraq war, has been dogged by some of the lowest approval ratings in U.S. presidential history.

Zogby said the worsening mood was a function in part of the lengthy transition, and Obama's inauguration next month would probably bolster public confidence again.

"We're sort of between things here," he said. "You've got one guy leaving who clearly is not in control, and the other guy coming in is not in control yet."

Most of the dips in mood were small and well within the poll's margin of error of 3.1 percentage points, but those who felt "very" or "fairly" secure in their jobs fell to just more than 59 percent from nearly 64 percent.

The number of people who were not very or not at all secure in their jobs doubled from 7 percent to 14 percent.

"What you're hearing people talking about for the first time in a long time is significant job insecurity," Zogby said.

The poll follows months of unrelenting economic turmoil, with a slumping housing market, gyrating stock markets and accelerating job losses creating uncertainty. Congress passed a $700 billion bailout for the U.S. financial services industry but rejected a much smaller package for ailing automakers.

About 54 percent of Americans oppose a bailout for the auto industry, compared to 41 percent who back one, the poll found. (Why are so many people against a auto company bail-out?)

The number of Americans who believe the country is on the right track dropped from 30 percent last month to 28 percent, still above June's all-time Zogby poll low of 16 percent.
"The bottom line is people are scared," Zogby said.

About 78 percent of Americans said they would be cutting back on spending for presents and entertainment during this holiday season because of the recession, although 71 percent said they expected the economy will be doing better in a year.

Positive ratings for the Bush administration's foreign policy dipped from 25 percent to 23 percent, while positive marks for the administration's economic policy remained mired at an abysmal 6 percent.

The number of people who gave their personal finances positive marks fell from 48 percent to 47 percent, and the number who are proud of their country fell slightly from 92 percent to 91 percent.

The only index question to rise was the approval rating for Congress, which inched up from a paltry 8 percent to 10 percent.

Obama's selection of Cabinet members like New York Sen. Hillary Clinton at state and Defense Secretary Robert Gates won approval from 60 percent.

The index combines responses to 10 questions on Americans' views about their leaders, the direction of the country and their future.

A score above 100 indicates the public mood has improved since the July 2007 benchmark. A score below 100, like the one this month, shows the mood has soured.

The RZI is released on the third Wednesday of each month. This month's telephone poll, taken Wednesday through Saturday, surveyed 1,039 likely voters.

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