Jan. 25 (Bloomberg) -- Americans increasingly expect a recession this year and they're looking to Democrats more than President George W. Bush for a solution, according to a Bloomberg/Los Angeles Times survey.
The pessimism was shared widely, with more than two-thirds of those polled saying the economy is doing badly, up from 56 percent in December. That is the most negative sentiment since the poll began asking the question in 1997.
They view temporary tax breaks, which Bush and congressional leaders have agreed to include in a stimulus package, as the most effective way to boost the economy, according to the survey.
``If we have tax cuts we'll have a little more money and use it to spend elsewhere in the economy,'' said Lynn Jacques, 45, a poll participant and bookkeeper in Durham, Maine, who says gasoline prices are taking a toll on her budget. Although she's a registered Republican, Jacques isn't impressed by Bush's record. ``He just has not been good for the economy,'' she said.
Almost eight in 10 poll participants said a recession is likely this year, up from 71 percent in December, and only 16 percent now call a downturn unlikely. Almost four in 10 said a recession is very likely. The negative outlook spanned income groups and political affiliations. Nine in 10 respondents who have household income above $100,000 said they expect a slump as did a majority of Democrats, Republicans and independents.
Trust on Economy
By a margin of 51 percent to 29 percent, respondents to the survey said Democrats can handle the economy better than Bush.
The Jan. 18-22 poll of 1,541 adults nationwide had a margin of sampling error of plus or minus 3 percentage points.
The dismal outlook matches that in world financial markets, which have rallied after a broad sell-off at the start of this week. In response to warning signs of a slowdown, the Federal Reserve on Jan. 22 cut the target overnight lending rate between banks to 3.5 percent from 4.25 percent, the biggest single reduction to the benchmark rate since the Fed began using it as its principal monetary policy tool in about 1990.
While their outlook for the economy is pessimistic, two- thirds of Americans characterize their personal finances as very or fairly secure, and a majority expects to spend the same amount of money on purchases six months from now as they do today. While six in 10 respondents in households with income above $100,000 say they'll be spending the same amount, a quarter of them say they'll be spending less money six months from now.
Consumer Confidence
A primary fear among economists is that falling home values and consumer confidence will slow personal spending, which accounts for more than two-thirds of economic activity.
Asked who or what is to blame should the economy fall into recession, Bush was named more often -- by almost two in 10 -- than any other single factor. Fifteen percent blamed mortgage lenders who made risky loans. Economists tie much of the current economic malaise to rising defaults among homebuyers with sketchy or no credit history.
Trust on economic matters broke along party lines, with 83 percent of Democrats saying their party can better handle the economy and almost two-thirds of Republicans saying Bush. Independents by a margin of 51 percent to 25 percent said they trust Democrats.
``I've got a lot of years in me and it's been better in the past, better generally under Democrats,'' said Sidney Shrewscury, 66, a retired state policeman in Glen Daniel, West Virginia, who identifies himself as an independent.
Wrong Track
While Bush will be giving his State of the Union address Jan. 28, most Americans already have a firm view of the nation's state of affairs: 63 percent said the country is seriously off on the wrong track. The last time a majority said things were headed in the right direction was April 2003.
Asked what would be the most effective temporary measure to stimulate the economy, a plurality of respondents said a one-time tax rebate, and almost two in 10 said extending tax cuts that were passed in 2001 and 2003 and are set to expire by 2011. Sixteen percent named government spending on public works projects and one in 10 said tax cuts for businesses.
In a reversal from past polls, Americans now say returning money to taxpayers through tax cuts stimulates the economy more than an economic program focused on health and education spending. The survey was conducted when both Republicans and Democrats were proposing a temporary tax cut to spur growth. The deal worked out between the administration and Congress includes tax rebates for individuals and investment incentives for businesses.
``It will take cooperation and collaboration to fix the economy,'' said Pamela Nelson, a 54-year-old English teacher and survey participant from Minneapolis, Minnesota, who votes Democrat. ``Neither party has a corner on the answers.''
To contact the reporter on this story: Matthew Benjamin in Washington at mbenjamin2@bloomberg.net ;
Last Updated: January 24, 2008 19:00 EST
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