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January 17, 2008
Economic Outlook Gloomy;
Consumers Cutting Spending
By Seth Brohinsky and Mark Schulman
As fears of a recession continue to rise, the nation’s economy has replaced the Iraq War as the most important issue facing Americans today. A new Fortune Magazine poll conducted January 14 – 16 finds two-thirds (65%) of Americans believe the economic conditions in this country are getting worse.
• Three-quarters (74%) believe the economic conditions in the country right now are only fair or poor.
• However, there are significant differences along party lines with a slight majority of Republicans (55%) saying the economy is only fair or poor compared to 87% of Democrats and 76% of Independents.
| Turning to the economy, in general, how would you rate the economic condition in the country today? | |||||
| Total | Republicans | Democrats | Independents | ||
| (%) | (%) | (%) | (%) | ||
| Excellent/Good | 26 | 44 | 12 | 23 | |
| Only fair/Poor | 74 | 55 | 87 | 76 |
Economic Impact at Home
The concern over the US economy in general is translating into financial worries at home. About half (48%) of Americans have cut back on their spending compared to last year, as 85% of Americans feel their economic situation over the past twelve months has not improved.
• Only slightly over one-quarter (28%) of Americans report spending more, while a similar amount (24%) report spending the same amount.
• In addition, less than half (48%) of low-income American’s (those making under $35,000) report being able to keep up with their credit card payments.
• Nearly six-in-ten (57%) Americans believe we are heading into a recession within the next twelve months.
| In the past 12 months, have you been spending about as much as you did before on most things, spending more, or cutting back your spending compared to twelve months ago? | |
| Total (%) | |
| Spending as much as before | 24 |
| Spending more | 28 |
| Cutting back | 48 |
| Which of the following best describes the country's economic condition right now? | |
| Total (%) | |
| In an economic recession right now | 19 |
| Heading into a recession in the next | 57 |
| twelve months | |
| Not in a recession and not heading into | 19 |
| one |
Proposed Solution: Tax Cuts for Middle/Lower Class
As a solution, three-in-four (76%) Americans believe tax cuts just for low and middle income people would be the most effective way to help the economy.
• Other popular solutions include: limiting rate increases on adjustable rate mortgages (75%) and increasing government spending on things like public-works projects (67%).
• Proposed solutions with the largest opposition include: tax cuts for businesses (44%) and expanding unemployment benefits and providing additional weeks of benefits (41%).
International Trade: Benefits Others More that U.S.
With much of the country worried about the state of the economy, many (67%) Americans say they now closely follow news about US trade policy with foreign countries. American’s see the current trade policy as a reason for the economic woes the US is currently facing.
• Almost 7 in 10 (68%) Americans believe international trade benefits other countries more than it benefits the United States.
• International trade is seen as having a largely negative impact on American workers (78% negative) and the Untied States as a whole (63%)
| Overall, who do you believe benefits more from international trade - The United States or countries that trade with the United States? | |
| Total (%) | |
| United States | 23 |
| Other countries that trade with the United States | 68 |
| Both benefit equally | 4 |
Government Not Doing Its Part
Eight in ten Americans (79%) feel the US Government has not done enough to help workers who have lost their jobs to increased foreign competition. A majority of Americans would support the following proposed policies aimed at helping workers who have lost their jobs to foreign competition and outsourcing:
• Policies with the greatest amount of support include: providing special training programs (90% support), providing tax incentives for companies to relocate to areas where workers have lost their jobs because of foreign imports (84%), allowing imports only from countries that ban child labor (82% support), and allowing imports from countries that meet certain clean air and water standards (78% support).
• Other popular alternatives are: giving workers longer-term unemployment benefits than the now get (63% support), placing high tariffs on goods coming from countries that produce low-priced goods (62%), providing government subsidies to companies facing low-priced foreign competition (59%), and allowing imports only from countries that allow unions to organize their workers (51% support).
• About two-thirds (64%) of Americans are willing to pay more to keep down foreign competition.
The China Effect
Where a product is manufactured does not impact American’s purchasing decisions except when that product is made in China.
• Nearly three-in-five (57%) Americans are less likely to buy a product if it is made in China.
• When products are manufactured in other areas, such as Eastern Europe (57%), Western Europe (55%), Canada (53%), India (52%), Africa (51%), Mexico (48%), Japan (47%), and South Korea (46%) nearly a majority say it doesn’t matter.
| Where are some places which export many products to the U.S. for each one, please tell me whether you are more likely to purchase a product manufactured in this area, less likely or doesn't matter to you in your purchase decision? | |||
| More likely (%) | Less likely (%) | Doesn't matter (%) | |
| Japan | 27 | 25 | 47 |
| South Korea | 14 | 39 | 46 |
| Western Europe | 26 | 17 | 55 |
| Eastern Europe | 18 | 23 | 57 |
| Africa | 17 | 28 | 51 |
| India | 11 | 35 | 52 |
| China | 11 | 57 | 30 |
| Mexico | 15 | 36 | 48 |
| Canada | 37 | 9 | 53 |
Political Fallout
What will the political impact be as American’s perceptions of the economy worsen? With the election cycle in high-gear, it appears that the Democrats have the most to gain.
• Democrats are seen by nearly a majority (45%) of Americans as the party that would do a better job keeping the economy healthy, compared to 35% who feel the Republicans would do a better job.
• Democratic positions on foreign trade are more in line with the American people than Republicans positions (44% Democrat vs. 35% Republican).
Economy and National Security
American’s are concerned about a number of economic and trade related policies, specifically issues relating to national security.
• Nearly eight-in-ten (78%) Americans are very concerned that the US is becoming increasingly dependent on foreign countries that might be hostile to the US.
• A similar percentage (77%) of Americans is very concerned that the US has not been able to check the safety of products coming from other countries.
In light of these findings look for the presidential hopefuls to speak about economic and trade policies that protect American jobs at home and a balanced trade policy that will create a more secure future.
Methodology
This Fortune Magazine poll was conducted by telephone January 14- January 16, 2008 among a random sample of 1,000 adults throughout America. The margin of error for the entire sample is approximately +/- 3 percentage points. The margin of error is higher for subgroups, for example, the margin of error for Democratic voters and Republican voters is approximately +/- 4 percentage points. Surveys are subject to other error sources as well, including sampling coverage error, recording error, and respondent error.
Abt SRBI public affairs designed the survey and conducted all interviewing. The full Fortune questionnaire and trend data may be found in the related link below.
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