Jones Lang LaSalle


What Growth? Economy Is Getting Worse Under Bush, Americans Say

Jan. 27 (Bloomberg) -- The U.S. economy was robust by almost every measure last year, prompting President George W. Bush to say that 2006 began ``with a full head of steam'' and he will make things even better. Most Americans don't buy it.

By a 59 percent to 37 percent margin, Americans disapprove of the way Bush is handling the economy, according to a Bloomberg/Los Angeles Times poll this week. About six out of 10 say the economy will stay the same in the next six months, while more say it will worsen than say it will improve. And by 47 percent to 22 percent, the public says the country is worse off economically since Bush became president.

The disconnect between the poll numbers and the economic data reflects anxiety about structural changes in the economy, said Vin Weber, a Washington lobbyist and former Republican representative in Congress who is close to the Bush administration. ``Americans have seen their basic conceptual view of the American economy shattered, and it hasn't been replaced by anything,'' he says.

Weber says mass job cuts announced by Ford Motor Co. and General Motors Corp. and bankruptcies and pension freezes at major airlines are among the reasons Americans are insecure even as gross domestic product is growing.

`Transformative Time'

The failure of incomes to keep pace with the economy, as well as high energy prices -- especially for gasoline -- also are undermining consumer optimism, said Roger Altman, who was deputy Treasury secretary under Democratic President Bill Clinton.

``Real GDP growth has been relatively healthy, but most Americans don't feel it,'' said Altman, co-founder and chairman of Evercore Partners, a New York investment firm. ``It's a transformative time for the U.S. economy.''

The survey, of 1,555 adults nationwide from Jan. 22 to Jan. 25, underscores a problem the Bush administration has tried to address in recent weeks: While many people -- 55 percent -- say the economy is doing well and 61 percent say they feel financially secure, they don't give Bush the credit. The poll has a margin of error of plus or minus 3 percentage points.

Even as the economy has strengthened over the past year, Americans have grown more pessimistic about Bush's stewardship of it. The 59 percent who disapprove of his handling of the economy is up from less than half in January 2005, and 70 percent felt financially secure a year ago. Anxiety is most pronounced among those with incomes less than $40,000, with 37 percent calling their finances secure, down from 54 percent.

Data vs. Opinion

Most economic indicators contrast sharply with opinions expressed in the poll. The economy grew at an estimated 3.6 percent annual rate last year, compared with an average over the past two decades of 3.1 percent.

The U.S. created more than 2 million new jobs last year, driving the unemployment rate down to 4.9 percent in December, the lowest in more than four years. Personal income was up 5.2 percent in November over the same month a year earlier.

Bush and other officials have fanned across the country to tout the numbers. ``Our job now is to maintain the momentum of this economy,'' Vice President Dick Cheney said in Kansas City on Jan. 6.

``Bush could do better,'' said Clarence Achziger, a mechanic and self-described political independent who lives in Port Angeles, Washington, and voted for Bush. ``The economy picked up in Bush's first term, but it's peaked out and is starting to slow down,'' said Achziger, 60, a poll respondent contacted for a follow-up interview.

Energy Costs

More than three-fourths of the respondents say they will need to reduce spending if energy costs continue to rise. The energy worries cut across party lines and income groups. Even among those earning more than $100,000, as many people say they would cut back because of energy prices as say they wouldn't.

After retreating from a peak of $3.11 a gallon last year, gasoline prices are rising again, to a national average of $2.38 a gallon from $2.20 in early December.

``I'm getting hit bad,'' said Tammy Fudem, a 45-year-old office manager who lives near Sacramento, California, and drives 25 miles each way to work. Because of gas prices, Fudem and her family have stopped eating out and are cutting back on clothes purchases. She blames ``greedy oil companies,'' not Bush.

Americans in all but one income class say the economy is worse off under Bush. The exception is those making more than $100,000 a year. In that group, 36 percent say the economy is better off because of Bush's policies, while 32 percent say it's worse off.

Republicans Too

Still, Bush gets little credit even from his supporters. Fewer than half of the Republicans surveyed say the economy is better under him.

``I don't think there's been a president who has really known the economy since Ronald Reagan,'' said Faye Bounds, 50, a nurse midwife from Houston who voted for Bush in 2004.
A bright spot in the poll concerns the housing market, which some economists expect to fall off this year, both in sales and home values. Eighty-six percent of poll respondents say they expect housing prices in their neighborhood to rise or at least stay the same, with almost two in five expecting an increase.

Fewer than one in five respondents expect the economy to be better six months from now, while one in five expect it to worsen and 59 percent say they expect no change. That differs markedly from economists surveyed by Bloomberg News earlier this month, who expect the economy to grow by 3.5 percent this year as employers add jobs, keeping the unemployment rate below 5 percent.

Linda Elliott, a Democrat from White Bear Lake, Minnesota, isn't swayed; she says the economy will worsen through mid-2006. She points to gas and health-care prices as big problems. ``The cost of everything is going up,'' said Elliot, 52, a beauty adviser at a Walgreen's drug store.

``Employers are either going to lay people off or expect more work from them.''