In another piece of bad news for President Bush, a key survey that tracks American consumers` confidence in the economy fell Tuesday after rising for six months.
Other recent surveys charting faith in the economy point the same way-down. And with the presidential election less than 100 days away, there is little time for anyone to reverse the direction of the mood or the economy itself.
The Conference Board, a New York-based business research group, released its monthly consumer confidence index Tuesday, for July. It showed that confidence, which had been rising with the economy since February, plunged this month by 11.6 points, from 72.6 to 61.
The Conference Board survey is based on interviews with the heads of 5,000 U.S. households.
There are several surveys of consumer confidence, business confidence and general faith in government policies. One of them, which reports the public`s faith in the government`s handling of the economy, is at a record low. And economists are quick to translate these economic indicators into political ones.
”I don`t find the surging support for (Gov. Bill) Clinton very surprising,” said Richard Curtin, director of the University of Michigan`s Consumer Expectations Survey.
Other surveys agree. Cahners Economics in Newton, Mass., issued its Business Confidence Index Monday, showing that business executives, like consumers, are losing confidence. The three-point drop in this index, from 66.8 to 63.3 points, wiped out all the gains since January, leaving executives as glum now as they were when the year began.
The University of Michigan`s Index of Consumer Expectations has been showing an increase since January, but it lags behind the others. Curtin said that, when its next survey is issued soon, ”some weakening wouldn`t be surprising.”
In this atmosphere, even good news is bad. The Labor Department said American wages and salaries rose only 2.9 percent between June 30, 1991, and June 30, 1992. The government could say this is proof inflation is under control. But it also means wages and salaries are growing more slowly than inflation, a sign that household incomes are falling and that workers are unlikely to be big spenders any time soon.
The various confidence surveys, which are considered reliable forecasters, bear this out.
When confidence is high, Americans are more likely to spend more on everything from groceries to vacations to new houses. This spending, in turn, fuels economic recovery.
But confidence is down, meaning that consumers will be sitting on their bank accounts, paying off debts piled up in the 1980s and postponing purchases until later.
No wonder business executives also are losing faith.
Normally Republican stalwarts, business people are turning surly. U.S. News & World Report magazine, in a survey of members of four major business and economist groups, found they all gave Bush bad marks-from a C-minus to a D-plus-for his handling of the economy.
Fabian Linden, executive director of the Conference Board`s Consumer Research Center, blamed his survey`s drop on a variety of factors-growing unemployment, the slowdown in the recovery, even the criticism of Bush`s policies at the Democratic convention.
Whatever the reason, the surveys are cause for worry in Bush re-election circles. For 20 years, whenever the Conference Board`s consumer confidence rating has been above 100 on election day, the incumbent president or party has won. On the occasions when it was below 100, the incumbent president lost- in 1976 (loser: Gerald Ford, rating: 87.1) and in 1980 (loser: Jimmy Carter, rating: 87.2).
The University of Michigan uses different figures, but its results are identical. When its consumer rating was in the 80s or 90s, the incumbent won; when it was below 80, the incumbent lost. Its current rating is only 71.2 and, Curtin said, is likely to fall.
Michigan`s rating of opinions of the government`s economic policy performs similarly. When this rating was above 100, the incumbent won, and vice versa. When Carter lost his bid for re-election in 1980, this approval rating was only 56, the lowest rating ever-until now.
In June, the approval rating for Bush`s economic policy fell to an all-time low of 55. This is part of an uninterrupted slide since the post-gulf war euphoria in early 1991.
”People feel the economy is adrift,” Michigan`s Curtin said.
”The real difference between this recovery and prior ones is that, in the past, consumers expected a recession to be a temporary interruption in an overall growth economy” he said. ”Now, there`s a greater concern about the long-term vitality of this economy, and that keeps confidence at lower levels.”
