Americans have become more optimistic about the economy and they are giving President Bush some of the credit, a new Times/Bloomberg poll shows.
Republicans running for election next month could benefit from the development, as voters say the economy will influence their choices in November more than any other national issue, including the war in Iraq and terrorism.
Consumer confidence fell this summer as gas prices peaked and the housing market weakened, particularly in California. Those polled in July were almost evenly split on the state of the economy, with 49% saying the economy was doing badly.
Now, the optimists outnumber the pessimists in the poll by 10 percentage points, with 54% saying the economy is doing well.
"There's a lot of conflicting indicators but things seem to be cruising along pretty steadily," said respondent David Busch, 38, a sales executive in Redmond, Wash., who describes himself as an independent voter. "We've seen a lot of alarmist talk about housing bubbles bursting, gas prices that are going to derail the economy that haven't materialized."
Seven weeks before the midterm elections, the economy remains voters' primary focus. Among registered voters, 32% listed the economy and jobs as the most important election issue, followed by the war in Iraq (21%), immigration (17%) and healthcare (10%).
Those polled cited a variety of reasons for feeling better about the economy, including unemployment at a low 4.7% nationally, lower gas prices this month and an interest rate freeze by the Federal Reserve.
That could be good news for Republican candidates, as the GOP is the party in power in Washington and may be able to take some credit for the economy.
When the economy is rocky, voters traditionally punish the party in power, said Bruce Oppenheimer, a political science professor at Vanderbilt University. But when the economy is doing well, their reactions are more difficult to predict, he added.
"This year it's a little more complex to figure because it's clear that the objective measures of how the economy is doing are not striking everybody equally," Oppenheimer said.
For instance, pay is rising for some college-educated professionals, but most workers face wage stagnation, he said. While falling gas prices could boost Republican candidates, he said, "The question is will it be too little too late?"
The Times/Bloomberg poll interviewed 1,517 adults, including 1,347 registered voters, nationwide between Saturday and Tuesday under the supervision of Times Poll Director Susan Pinkus. The survey's margin of sampling error is plus or minus three percentage points.
Although the survey shows more than half of registered voters still disapprove of the way Bush is handling the economy, the ranks of those who approve are increasing. Among registered voters polled, 43% said they approve of the president's handling of the economy, up from 38% in July and a January low of 37%.
"Everything seems to be going all right. I don't hear a lot of people complaining that much about the economy. The Feds have kept the interest rates down, so that will probably help," said Chester "Chet" Kusmitch, 69, a retired union carpenter in Crystal Falls, Mich.
Kusmitch said the president is doing a good job handling the economy. "You can't blame everything on the president for crying out loud. A lot of things effect the economy."
Charles Gunnells, 54, a disabled diesel mechanic and registered Republican in Salyersville, Ky., said he has his doubts about the economy, but believes the president is doing "about as good a job as anybody else could be doing."
Gunnells said his opinion of the president improved in recent weeks as he watched prices at the gas pump drop. "I feel a lot better about it when I see the prices go down," Gunnells said.
Many of those polled agree with him — 26% said high oil prices are the greatest threat to the economy today, far ahead of other factors such as foreign competition (18%) and terrorism (16%).
The average price of gas rose to $3.08 in August before dropping to $2.54 this week, according to the Department of Energy. The dip in oil and gas prices is increasing most Americans' confidence in the economy, said Chuck Williams, dean of the business school at the University of the Pacific in Stockton.
"People see the economy in terms of their daily expenses — what is it going to cost to pick up their child from day care, what does it cost to buy lunch, what does it cost to fill the tank of their car. And if someone's driving an SUV and it's 100 bucks every time you fill up, that gets your attention," Williams said. "If the price is down by 50 cents a gallon, you notice it."
He said consumers' optimism is tempered by uncertainty about fuel prices as winter approaches and by a weakening housing market on both coasts. Homes are lingering on the market in Phoenix, Philadelphia and Washington D.C., and fewer new homes are being built. Last month, new home starts were down nearly 20% since last year, 6% since July, according to a Commerce Department report Tuesday.
In the latest poll, 53% of respondents expect home prices to remain unchanged six months from now and 19% expect prices to drop. Both numbers are up four percentage points since July. A quarter of those earning $60,000 to $100,000 worry that their home will lose value during the next six months, the poll showed.
"Six or twelve months ago, pretty much everybody thought housing prices were going to go up," said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh. "Clearly, people have changed their expectations. A little bit of reality has set in."
Donna Bushby, 41, a part-time office worker, said she's getting nervous about the cost of heating her home this winter in the Chicago suburb of Elmwood Park. She and her husband, a truck driver for United Parcel Service, also worry about the value of their home. Six houses on their street are not selling and one has been on the market for a year and a half.
The couple earn enough to cover expenses for a family of five but not to save, Bushby said, and consider home equity as savings. "So if you think of your house going down, that's like your nest egg going down."
Many Americans appear to be stretching to make ends meet around the house. More than half of those polled, 53%, said they have trouble keeping up with rising costs, including 30% of those earning more than $100,000.
"People's paychecks are not going up as much as the prices around us," said Bushby, who is nonetheless optimistic. "Hopefully, it's temporary."
Geoffrey Gray Sr., 56, is a registered Republican but believes the president has mismanaged the economy and worries about the future. Although Gray's house in Reading, Pa. is paid for and the local market isn't likely to collapse, he worries about poor families and "the shrinking middle class."
"People are living paycheck to paycheck," he said.
Many of those polled, especially working-class Americans, are postponing major purchases such as cars, vacations and large appliances, unsure about their finances. Of those polled, 64% said now is not a good time to make major purchases — including 81% of those earning less than $40,000, 66% of those earning $40,000 to $60,000.
"If I do make a big purchase," said Bushby, "it may be a hybrid car."
molly.hennessy-fiske at latimes.com
How the poll was conducted: The Los Angeles Times/Bloomberg poll contacted 1,517 adults, including 1,347 registered voters, nationwide by telephone Sept. 16-19. Telephone numbers were chosen from a list of all exchanges in the nation, and random-digit dialing techniques allowed listed and unlisted numbers to be contacted. Multiple attempts were made to contact each number. Results were weighted slightly to conform with census figures for sex, race, age, education and region. The margin of sampling error for all adults, and registered voters, is plus or minus 3 percentage points. For certain subgroups, the error margin may be somewhat higher. Poll results may also be affected by factors such as question wording and the order in which questions are presented.
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