ENGLEWOOD CLIFFS, N.J., March 3, 2008---A vast majority of Americans are now dramatically negative on the economy, the stock market and housing, a shift in their outlook in only the past three months, according to a new exclusive CNBC Wealth in America survey. American homeowners on average are now expecting a slight decline in their home values for the first time since the Wealth in America survey began a year ago.
According to the CNBC Wealth in America survey, 83% of Americans rate the economy as fair or poor, up 11 points since the December poll. Almost two-thirds are pessimistic now and about the future.
With the 2008 Presidential campaign heating up, the survey finds Democrats with a considerable lead over Republicans on the question of which party can better handle the economy and healthcare. Democrats have slimmer margins when Americans were asked which party would be best for "your personal financial situation" and real estate. Specifically, 39% of those surveyed say the Democratic Party is better at dealing with economy and 25% of those surveyed say Republicans are better.
There are some modest bright spots: despite the gloomy outlook, half of all Americans expect to keep their spending the same on discretionary items, including movies, restaurants and vacations. One-third say they'll spend less and 13% expect to splurge.
The credit crunch doesn't appear to have hurt Americans' ability to get loans. About three-quarters of Americans say they haven't had any trouble obtaining credit, virtually unchanged from the October survey.
If there is an economic downturn, Americans don't believe their finances are in bad shape. Only 16% say they have "a lot of debt" and 70% say their debt has stayed the same or gone down in the past year.
Yet just 39% of Americans expect the value of their stock portfolios to rise in the next 12 months, down from 60% a year ago. That's caused 24% of stockholders to say they will invest more conservatively in the next several months, up from 14% in December.
In healthcare, 44% of those surveyed say Democrats are better, 19% say Republicans and 16% say neither major political party is better.
Of those surveyed, 32% say Democrats are better at dealing with "your personal financial situation," 26% say Republicans and 19% say neither party. When it comes to which party is better at dealing with the stock market, Republicans have a slight edge with 26% compared with 22% for the Democrats.
The survey shows, however, that when it comes to specific economic problems, a large percentage have little faith in either political party. For example, 53% of Americans have no preference on which party would be better for the real estate market.
Meanwhile, just 20% of Americans surveyed expect their home price to increase in the next year, down from 40% a year ago. The expectation is that home prices will decline a slight 0.3%, the first decline since the quarterly survey began a year ago. Just last quarter, Americans believed home values would rise by 2.2%.
The survey also shows concerns on stagflation, when prices rise and growth stagnates. Americans expect their wages to rise 5.4% in the coming year, unchanged from December. Yet they expect prices for everyday goods they buy to rise 8.2% on average, up from 6.4% last quarter.
The CNBC Wealth in America survey was conducted February 22-24 by Hart-McInturff, a scientific survey of 803 adults. It has a margin of error of
+/-3.5%
The CNBC Wealth in America survey will be analyzed and debated all day tomorrow on CNBC, beginning with "Squawk Box" (6-9 AM ET). Reporting the results and leading the discussion will be Steve Liesman, CNBC Senior Economics Reporter. The results will also be available on CNBC.com.
Bill McInturff, partner, Public Opinion Strategies, says the survey results are unique because they show broad-based negative views across incomes, regions and ages, noting that most polls show wide disparities in economic views across such groups. "This is a quick turn, it's deep, dimensional and meaningful,' said McInturff, of Hart/McInturff , which conducts the national survey of 800 Americans for CNBC.
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