Deep pessimism about future economic growth is weighing on Americans as they hunker down from the effects of higher gas and food prices and fear that those prices could remain elevated for years, a poll from CNBC has found.
The CNBC All-America Economic Survey also reveals that Americans’ attitudes toward home ownership and expectations for housing prices are both deteriorating sharply. An astonishing one out of every two Americans knows someone who is being foreclosed upon or facing the threat of foreclosure.
The survey of 800 Americans, from across the nation, income groups and ages, finds the percentage of Americans who believe the economy will get worse in the next year spiking to 37 percent, a 15 point gain from December. It’s now just five points below the all-time high in the series of 43 percent in June 2008, which came in the midst of a surge in gasoline prices.
Those negative attitudes were registered just before the disaster in Japanand, if anything, could have worsened since then.
Americans see inflation as widespread and are cutting back on non-essentials to make ends meet. On average, respondents see prices rising 6.6 percent over the next 12 months, up from 3 percent in December and the second highest median gain in the survey’s four-year history. Three-quarters of Americans says they have seen food prices rise over the past six months, and 61 percent believe the increases will last longer than a year. A similar percentage believes that higher gas prices are here to stay.
When it comes to coping with those higher prices, more than 60 percent of Americans say they are either saving, traveling or driving less. More than 70 percent say they are spending fewer dollars on restaurants, movies and concerts, making leisure cutbacks the number one way the nation is economizing in the face of higher gas and food prices.
In one of the most dramatic responses to the survey, Americans also do not believe that their wages will keep up with rising prices. Americans see their wages falling by 1.1 percent in the next 12 months, the biggest expected decline in the survey’s history. Less than a third of the nation expects wage gains in the next year, and most of these see only a modest 1 percent to 3 percent boost to their paychecks.
Americans expect their home values to fall along with their wages. After a brief blip upwards in December, expectations for housing price declines resumed in the latest survey, with Americans looking for a 1.2 percent mean decline, compared with the 0.3 percent increase they expected in the December survey. It’s the biggest drop in the mean in the survey’s history.
The survey also found that attitudes toward owning a home have gotten more negative. Just 63 percent of Americans believe it is better to own than rent, which compares with 89 percent registered in a 1996 survey by Fannie Mae. And 48 percent of the nation know someone who has been foreclosed upon or is facing the threat of foreclosure, up from 33 percent in September 2008.
Still, 73 percent of Americans believe that owning a home is an essential part of the American dream, compared with 25 percent who say it is not.