The Return Of Economic Optimism?
There are signs out there that people are becoming some what more optimistic about the outlook for the economy.
There may be some good news for President Obama in new CNN/ORC poll data that seems to suggest an uptick in economic optimism:
Washington (CNN) – Although most Americans think that the economy is currently in poor shape, economic optimism has skyrocketed since last fall, according to a new national poll.
And a CNN/ORC International poll released Tuesday also indicates that while voters are divided on whether President Barack Obama or Republican challenger Mitt Romney would do a better job on the economy, Romney holds an edge among crucial independent voters in the race for the White House.
“Americans are usually optimists, but in 2011, polls for the first time found that more than half the country thought that economic conditions would worsen in the next 12 months,” says CNN Polling Director Keating Holland. “Now that trend has reversed itself, with only four in ten saying that the economy will be in poor shape a year from now.”
Sixty percent of those questioned say the economy will be in good shape next year, a surge from 39% who felt that way last October. Despite that jump, three-quarters say that current economic conditions are poor, a slight worsening of opinion since May, but better than where things stood in January.
“Not surprisingly, the poll indicates that the economy’s the public’s top issue, the only topic that more than half say will be extremely important to their presidential vote in November,” adds Holland.
(…)
Forty-eight percent of registered voters say the president would better handle the economy, with 47% saying Romney would do a better job.
“The economy remains the number-one concern to voters, but neither President Barack Obama nor Mitt Romney have an edge on that issue among registered voters nationwide,” Holland says. “The groups that think Romney would do a better job – higher-income Americans, men, and older voters – and counterbalanced by lower-income Americans, women, and younger voters who give the edge to Obama. Fifty-two percent of independents think Romney would do a better job on the economy.”
One caveat here is that this is a poll of adults rather than registered or likely voters so what these numbers might mean for the election isn’t necessarily clear. That said, though, if the public is optimistic about the future state of the economy that is arguably something that will work to the benefit of the President. Of course, this is just a snapshot in time, and future conditions could cause public sentiment to turn quickly. Tomorrow, we’ll get the jobs report for June and the consensus forecast seems to be for job growth under 100,000 new jobs, which is hardly good enough to ease our unemployment problem. Additionally, earlier this week we received information that may indicate future economic slowdowns in the report that U.S. manufacturing in June shrank for the first time in three years, something that was mirrored in the manufacturing data from Germany.
On the other side of the coin, though, we’ve gotten some employment related news this morning that actually seems quite good. First of all, the June ADP jobs report beat expectations with a report that businesses had added 176,000 jobs in June:
(Reuters) – U.S. companies added more jobs in June, beating expectations for a decrease in hiring and suggesting the economic recovery has not completely lost traction.
The ADP National Employment Report said on Thursday private employers added 176,000 jobs last month, more than the 105,000 economists had forecast.
May’s figures were revised up slightly to an increase of 136,000 jobs from the previously reported 133,000.
The report is jointly developed with Macroeconomic Advisers LLC.
“In isolation, this is a healthy surprise that private worker hiring came in higher than expected. I don’t know if it’s sustainable,” said Robbert Van Batenburg, head of global research, at Louis Capital Markets in New York
Then, the Labor Department reported that initial unemployment claims had posted their biggest drop in months:
(Reuters) – The number of Americans filing new claims for unemployment benefits last week fell by the most in two months, government data showed on Thursday, a hopeful sign for the struggling labor market.
Initial claims for state unemployment benefits dropped 14,000 to a seasonally adjusted 374,000, the Labor Department said. The prior week’s figure was revised up to 388,000 from the previously reported 386,000.
Economists polled by Reuters had forecast claims falling to 385,000 last week. The four-week moving average for new claims, a better measure of labor market trends, fell 1,500 to 385,750.
The initial claims data has no bearing on Friday’s employment report, which is expected to show employers added 90,000 to their payrolls in June, according to a Reuters survey, after increasing them by 69,000 in May.
The unemployment rate is seen steady at 8.2 percent after rising in May for the first time since August.
Job growth has weakened in recent months amid a cloud of uncertainty, spawned by the European debt crisis and fears of tax increases at home next year.
It’s worth nothing, as I’ve said before, that the ADP report isn’t necessarily indicative of what we’ll see in tomorrow’s BLS report. There have been months where the two reports have correlated and others where it almost seems as if they’re measuring two different things. Partly, this is because ADP’s report does not get seasonally adjusted and because it relies primarily on reports form ADP payroll clients. Nonetheless, it’s a hopeful sign in an economic environment that has been otherwise quite depressing. Similarly, the initial jobless claims report is quite good but it’s worth noting that it comes after more than four weeks in which initial claims had been rising, which may indicate that June was a bad month for layoffs, and that doesn’t necessarily bode well for the jobs report tomorrow.
Nonetheless, there is some good news out there and, as the poll shows us, the public seems to be getting a little more optimistic if not about the short term, at least about the medium-term outlook for the economy and that is potentially good news for the President. If this moderately good feeling continues into November when people go into the voting booths, they may be reluctant to change horses in mid-stream and that, in the end, is what any race against an incumbent President is all about.
Of course, all of this is very transitory. It’s only two months ago that similar polls were showing something quite different on the minds of voters, and we were talking about the return of economic pessimism.
I’ll wait for more then a couple datapoints before drawing conclusions.
It’s the effect of good weather ;-).
Seriously, there are surely seasonal variations, and spring has to be one of the best times for optimism.
Hell, with CNN and with Obama up for reelection I’m actually surprised that “poll” wasn’t more Zogby-esque.
Remember that scene in the second “Airplane” movie, where the Soviet news guy references a huge conflagration clearing the way for that “glorious” new tractor factory? Well, by the time we hit the real campaign season in the fall I suspect CNN will be so desperate to boost the Obama campaign they’ll actually go into that same mode. Seriously.
In any event, Zombieland is not so dumb as to have any real economic optimism at this juncture. The reality is the economy has been crappy for years and not much has changed in the past several months, other than the obvious fact GDP growth has slowed from weak to a standstill.
The job markets might or might not be holding on, it’s tough to say. Perhaps the worst irony with that, however, is to the extent there is any meaningful growth out there in the labor markets to a large extent it consists of much older people being hired on. The BLS tracks labor force participation rates by age groups. The conclusions are inescapable. Vast numbers of people over age 65 are returning in droves to the workforce. Obviously these folks couldn’t stay retired and still make ends meet. Sad state of affairs.
@Tsar Nicholas: Speaking as an older worker, the reason we are being hired is that we are working for crap wages that supplement the existing pension/SS income. The young workers and family breadwinners can’t live on these wages. We are probably making the employment situation worse by acting as scabs. I’m not too proud of it but there it is.
Wait unitl they get a load of Ryan/Romney economics and voucher based Medicare specifically designed NOT to meet the rate of health care inflation.
I’d bet that the gain in optimism tracks the fall in gas prices…
@Tsar Nicholas: Sheesh, Nick, you keep talking about Zombieland and Zombiebots and I don’t know if you’re talking about a movie, a videogame, or a fever dream you had last night. Can you clarify what you mean by that stuff?
One of my measures is the presence of job applications on the counter of fast food places, which is happening locally. Yet another measure is gaming revenue (people bet their disposable income, right?) which Moody’s projects to be stagnant for the rest of the year. So, who knows.
I think it’s tracking with polling that shows the Obama has a 4 to 5 point margin over Romney. If Romney closes that margin people will start demonstrating more pessimism.
From today’s WSJ:
@Tsar Nicholas:
“In any event, Zombieland is not so dumb as to have any real economic optimism at this juncture. The reality is the economy has been crappy for years and not much has changed in the past several months, other than the obvious fact GDP growth has slowed from weak to a standstill. “
Very astute and realistic comments. Given that the UE stat is derived by the number of people actively looking for work in the previous 4 weeks, who knows what the actual UE number really is.
Frank Luntz had one of his focus groups on last night, and was asking them their opinions about the economy. When questioned about their own optimism concerning growth for themselves or for their children, only one hand went up for being optimistic about the future for themselves. I just don’t think the public at large, out there, is buying statistical economic upticks (noise) in the face of their own either stagnant or declining circumstances.
@jan:
The 2008 collapse of the financial and housing markets caused the loss of $14 trillion in wealth and income from our economy, people (on the right or left) rightfully have the feeling that we’re in for a long difficult time.
@jan: “Frank Luntz had one of his focus groups on last night”
I thought that you never watched Fox or listened to Rush, and it was just a complete coincidence that you echoed their talking points every day. Boy, talk about being disullusioned!
I am shocked that Jan has been lying about this. Shocked, I say!
I would be interested to see if Jan can show us a Frank Luntz focus group that has EVER told Fox viewers something they did not want to hear…
Then sixty percent of those surveyed do not understand how a modern economy works. Next year the economy will be roughly where it is now, stagnating or barely registering growth, and that assumes our D.C. wonders don’t jump in with spending cuts and tax hikes.
@Ben Wolf:
I wish I could believe that Congress will do no harm.