Americans’ economic mood is at its brightest in more than three years even as Washington echoes with warnings of a new recession if deficit negotiations fail, a Bloomberg National Poll shows.
While just 38 percent say the U.S. is on the right track, that’s five percentage points more than in the last poll in September and the best reading on that question since September 2009, when the U.S. was just emerging from recession. Fifty-five percent of respondents say the U.S. is on the wrong track.
“Things are improving,” says David Jellison, 37, a systems administrator in Puyallup, Washington, who’s planning a family vacation to California. “People I know who were out of work are getting jobs. Everything seems to be picking up.”
The poll reflects the growing optimism that contributed to President Barack Obama’s re-election victory. Forty-eight percent of respondents say they approve of his handling of the economy as housing prices rise, household debt falls and employment grows, with 48 percent disapproving. That’s his best showing since September 2009, according to the poll of 1,000 adults conducted Dec. 7-10.
Asked about their outlook for 2013, 31 percent say they expect a better year financially compared with 23 percent who say they will be worse off; 44 percent say their personal fortunes will stay about the same.
Respondents anticipating higher household income outnumbered those expecting a decline by a 30 percent to 17 percent margin, though a 49 percent plurality expect their situation to be unchanged, the poll found.
Kelli Larocca, 26, an accountant in Mandeville, Louisiana, said her husband, Vincent, 32, recently landed a job as a sales manager for a wholesale dental supply company that paid $20,000 a year more than his previous position.
Larocca, a mother of two boys, ages 4 and 5, is expecting her third child early in the new year. The couple this year has paid off about $20,000 in student and automobile loans.
“We had accumulated a lot of debt,” she says. “We’re finally in good position to pay that down.”
They aren’t alone. As a share of personal income, household debt fell to 97.1 percent in mid-2012, down from a peak of 114.2 percent in the third quarter of 2009, according to data compiled by Bloomberg.
Amid the general cheer, consumers remain concerned by health-care costs. By a 38 percent to 10 percent margin, poll respondents say they expect to pay more for insurance premiums, co-pays or deductibles. Thirty-seven percent say their costs would remain the same.
Colleen Moore, 61, a retired state government worker who lives in Dexter, Michigan, says she expects her husband’s Medicare out-of-pocket costs to increase because of efforts to reduce the deficit. The federal health-insurance program for the elderly is among the entitlements being targeted by Republicans for spending cuts.
“The premiums for my health insurance and his Medicare supplemental insurance seem to be increasing annually,” Moore adds in an e-mail. And the rising cost of hospital stays “has the potential to destroy our retirement savings.”
More than three years after the end of the most punishing recession since the 1930s, an era of anxiety may be ebbing. By 18 percent to 12 percent, poll respondents say job security is improving. Sixty-eight percent of those surveyed say they expect no change or the question doesn’t apply. Job growth has averaged 158,000 over the past five months.
The poll provided further evidence that the housing-market decline has ended. The S&P/Case-Shiller 20-city composite housing index has risen on a year-over-year basis for four months. Poll respondents were evenly split on whether the market value of their home would rise or fall next year.
Charlie Tracy, 62, of Pomfret, Connecticut, a retiree who three weeks ago started a second career as a real estate agent, says sales activity is picking up in his area.
“It’s good, and it’s going to get better,” he says.
Still, the mood remains fragile. The University of Michigan’s December reading of consumer confidence fell to a four-month low of 74.5. Economists at Capital Economics blamed that on worries over the prospect of more than $600 billion in automatic spending cuts and tax increases starting to take effect on Jan. 1.
Obama and Republicans are negotiating a deficit-reduction agreement to avert that. With the economic recovery still weak, the Congressional Budget Office has warned that implementing the automatic fiscal tightening could trigger a recession.
The political skirmishing may be taking a toll on the holiday shopping season, with 51 percent of those surveyed saying they plan to spend “about the same” as last year. The 38 percent who say they will trim spending compares with just 10 percent who are planning to spend more, though it’s lower than the 46 percent who said they would cut back in a Bloomberg poll in December 2010.
The labor market, where the 7.7 percent unemployment rate has fallen a full percentage point over the past year, remains a worry even with the recent job gains. Asked to name the most important issue facing the country, 34 percent select “unemployment and jobs,” compared with 19 percent who choose the U.S. deficit.
The Federal Reserve remains sufficiently unsettled about the economy’s prospects that it is expected to continue monthly asset purchases of $85 billion after today’s conclusion of a two-day meeting by its policy-making committee. Poll respondents approve of Fed Chairman Ben S. Bernanke by a 31 percent to 26 percent margin.
The poll was conducted for Bloomberg by Selzer & Co., a Des Moines, Iowa-based pollster. The margin of error was plus or minus 3.1 percentage points.
© Copyright 2015 Bloomberg News. All rights reserved.