American optimism over the economy took a dip in the second quarter, largely the result of concern over rising prices, but the outlook of the wealthiest Americans surged, according to the CNBC All-America Economic Survey.
Just 24 percent of the 800 Americans polled throughout the country believe the economy is excellent or good now, down from 27 percent in the first quarter. There was a similar drop of those who believe the economy will get better from 28 percent to 24 percent. Both declines are close to the polls 3.5 percent margin of error, showing that, at best, optimism stagnated in the quarter.
The decline comes with reasonably upbeat outlooks for gains in home prices and wages, suggesting that a 14-point rise in the percentage of Americans who believe everyday prices will rise is most likely behind the decline in overall economic optimism. The median expectation for price increases rose to 2.8 percent from 2 percent in the prior quarter. Gasoline prices, often an important factor in Americans' economic confidence, rose about 60 cents during the quarter.
The price increases, however, did not affect the wealthy whose optimism soared. Looking at those with incomes of $100,000 or more or with $50,000 or more in the stock market, 45 percent say the economy is excellent or good, up 12 points since March. Their outlook surged on everything from expected wage gains to home price increases.
The poll highlights the growing concern over economic inequality, where the wealthy appear to have benefited most from the economic expansion and the middle class and poor have been left behind. The poll also helps explain another recurrent question: If Americans have more jobs and gas prices are, in fact, lower, why aren't consumers spending more?
The results show that extra money in Americans' pockets goes first to paying down debts. Asked what they were doing with extra money from lower gas prices, 19 percent of respondents picked paying down debt as their No. 1 choice, followed by the 13 percent who chose driving more and spending more. Of those who have higher household incomes compared to a year ago, 31 percent said the additional money was used to reduce debt levels.
Neither political party has an edge in the public's mind on fixing the economy, with 25 percent picking the Democrats as better in dealing with the economy and 25 percent choosing the Republicans; 21 percent say both parties are about the same, and 24 percent see neither as any good. Respondents split along party lines but Independents gave Republicans a 9-point advantage.
"Each party has the opportunity and challenge to present a set of economic policies that both appeal to Independents and differentiate them from the other party,'' said Micah Roberts, the Republican pollster who conducted the survey from Public Opinion Strategies.
Jay Campbell, who worked on the poll from the Democratic side with Hart Research Associates, said, it "demonstrates that those at the top are doing great—everyone else is stagnating or faltering. Whichever party shows it can remedy this situation is the party that will "win the economy."
Democrats held advantages over Republicans in handling four of the seven specific economic issues asked about in the poll: the minimum wage, health-care costs, and corporate and individual taxes. Republicans were given the edge on business regulation, reducing the deficit and protecting America's trade interests. One positive for the Democrats: reducing health-care costs was chosen as the most important economic issue, chosen by 25 percent of respondents, followed by the 18 percent who picked reducing the federal deficit.