Americans' attitudes toward the economy took a sharp turn downward in the third quarter, according to the CNBC All-America Economic Survey, with just 23% believing the economy will improve in the next year, the lowest level of optimism in three years.
The good news: Views on the current state of the economy (compared with the outlook) slid only modestly, with 48% of the public rating the economy as excellent or good, down from 51% in May, and 49% rating the economy as fair or poor, up just a point.
But with only 23% expecting economy to improve and 32% believing it will get worse, the poll marks the first time in the Trump presidency that economic pessimism outstrips optimism.
"October 2018 was the apex of the Trump economy,'' said Micah Roberts, partner with Public Opinion Strategies and the Republican pollster for CNBC. "There might be a new apex, but so far, that has been the point at which everything was going the best. ... This could be the beginning of a new Trump economy."
The optimism gauge has been trending down over the year, but the 7-point decline in from the prior survey is the biggest quarterly drop since 2011. The surge in the economic outlook that accompanied the election of President Donald Trump, which grew and then sustained over a nearly two-year period, has now been completely erased.
Stocks declined for a third day on Thursday after a reading of the services economy came in much worse than expected.
'Bad quarter all around'
"It was a bad quarter all around,'' said Jay Campbell, partner at Hart Research, the Democratic pollster for CNBC. "The real question for this poll is is this just a bad month or really a turning point? If there is going to be a turning point in this presidency, you can look back at this quarter and say this was it."
The poll of 800 Americans nationwide conducted last week, with a margin of error of plus or minus 3.5 percentage points, suggests a variety of reasons for the growing pessimism. Just 36% of the public believe their wages will grow in the next year, down 11 point from the prior quarter to the lowest level since March 2016 and at odds with the tight labor market data showing record low unemployment.
At 35%, the percentage of Americans who say now is a good time to invest in stocks is also the lowest in three years and it's one point below the 36% who say now is a bad time invest, leading to the worst net optimism number since June 2016.
Seventy-five percent said they believe prices will increase in the next year for everyday items, up from 59% in May.
Impeachment effect?
There may also be political reasons behind the growing pessimism. The poll was conducted amid intense discussion of impeachment over Ukraine. Economic optimism among Republicans fell 13 points from the prior quarter to the lowest level of the Trump presidency. It declined just 1 point for independents and 5 points for Democrats. A separate question found that 56% off Republicans are concerned about the negative effects of impeachment on the economy compared with just 26% of Democrats.
The poll also found substantial disagreement among the public with several of Trump's signature economic issues. A plurality of 47% disapprove of his handling of the U.S. relationship with China and 55% disapprove of his border security and immigration policies. Opposition grew strongly to the immigration policies among independents and Democrats while support grew modestly among Republicans.
Put it all together and the president is now sporting his worst economic approval numbers yet, with 50% now disapproving of his handling of the economy, the worst of his presidency.
Another potential problem for the president: Asked about the most important issue for elected officials, 41% of the public named health insurance, more than the next three issues — the budget deficit, taxes and tariffs/trade — combined. In fact, health insurance is the No. 1 issue for Democrats, independents and Republicans.
