On the eve of another potentially bruising political battle over the nation's debt, American sentiment dipped back into its post-crisis financial funk, according to the CNBC All-America Economic Survey.
The third quarter survey of 812 Americans across the country found 61 percent saying they are downbeat on the current state of the economy and pessimistic for the economic future, a 5-point increase from the prior quarter and the highest level in almost two years.
Smaller expected gains in Americans' paycheck and housing values cast a pall on sentiment in the quarter and reversed a brief blip of optimism measured three months ago. The survey found that middle class attitudes registered some of the biggest declines. The percentage of white collar workers who believe the economy will improve in the next year declined 18 points compared to the second quarter, three times the decline for all adults. Only one in three college grads expect their wages to rise in the next year, down from one in two in the last quarter.
There were two optimistic signs: Americans lowered their outlook for inflation over the next year, and nearly 52 percent of investors—those who report owning at least some stock—believe now is a good time to invest in equities, up 4 points from the last survey and equal to the highest level since the financial crisis hit in 2008.
But neither was enough to offset the prevailing negative sentiment. Americans said they expect their home values to rise just 0.8 percent on average in the next year, down from 3.1 percent in the second quarter. Although higher than in the depths of the recession, expectations for wage gains in the next year averaged 3.1 percent, down from 3.9 percent in the second quarter. More significantly, just 34 percent of respondents expect any increase at all in their paychecks, compared with 41 percent a quarter ago.