Economy's slide has voters on edge

WASHINGTON -- Americans are increasingly downbeat about the economy and deeply worried that their standard of living is at risk, according to a new USA TODAY/Gallup Poll that shows family finances battered by a rise in fuel prices, the loss of jobs and a housing bust.

In all, 42% of those surveyed from Wednesday to Saturday rate the nation's economic conditions as poor, the most negative outlook since 1992 — another presidential election year, and one defined by economic angst that contributed to a Democratic takeover of the White House.

As a record 22 states hold presidential primaries and caucuses today, almost half of Americans say the United States is in a recession or depression. That bleak outlook is likely to reverberate in favor of Democrats again in this November's election, according to economists surveyed in a separate poll.

"It's gone from two years ago you could heat your house for $200, $220 a month, and now it's up to $500 or $600," says Natale Umbro, 59, owner and executive chef at the Tuscan Sun restaurant in Easton, Mass., who was among those surveyed. That has strained his budget — he is carrying about $12,000 in credit card debt — and made him wonder about the nation's leadership.

"I love this country; I joined the Air Force because this is the greatest country in the world," says Umbro, who emigrated from Italy with his family as a child. "But are they making laws … to protect the people from this?" He doesn't plan to vote in today's Massachusetts primary, but he does hope to cast a vote in November for Republican hopeful John McCain.

Voters typically blame the party that holds the White House for hard times. In a USA TODAY survey taken Jan. 23-25, 47 top economists predicted by 77%-4% that the economy would help Democrats over Republicans in the fall elections.

"This is a clear plus for the Democrats going into the fall campaign, so I think that the Democrats will certainly subscribe to the view that 'It's the economy, stupid,' " says Greg Valliere, chief political strategist for the Stanford Financial Group. "And this economy is not going to turn around anytime soon."

A year ago, the 2008 election seemed likely to be dominated by the war in Iraq, but economic concerns gradually have become a stronger focus of debates, campaign ads and voter queries. Now, voters' views of the economy help define each candidate's support.

Voters who are most pessimistic are drawn to the Democratic contenders, especially New York Sen. Hillary Rodham Clinton, according to an analysis of the USA TODAY survey. Those who are more upbeat are supporting the Republicans, especially former Massachusetts governor Mitt Romney.

Clinton, hammering on the economy at rallies leading up to today's Super Tuesday contests, has been citing the case of Dianne and Tony Wafford at nearly every stop since she met the couple Saturday morning in Inglewood, near Los Angeles.

The Waffords took out a second mortgage to help send their daughter, Whitney, to college and now risk losing their home because payments on the adjustable-rate loan have risen. "They were responsible people … who did what they thought was right," Clinton said at an Albuquerque rally Sunday. She said she was "amazed and frustrated and outraged" by their plight.

Just 4% of Clinton's supporters call the economy good while nearly two-thirds say it's poor. Just over half of those backing Illinois Sen. Barack Obama — a Democrat who also talks about the economy at nearly every stop — say the economy is poor.

Obama held an "economic summit on reclaiming the American dream" in Albuquerque on Friday, joined by some high-ranking supporters and community organizers.

On the Republican side, one-fourth of Arizona Sen. John McCain's backers call the economy poor and an equal number say it's good. Just 15% of Romney's supporters rate the economy as poor; a 43% plurality see it as good.

Still, even Romney makes a point of telling audiences he is the candidate best qualified to address economic woes, in part because of his experience in the business world. "I would think at a time like this, when our economy is fragile, it actually would be helpful again to have a president who's had a job in the real economy," Romney, who was once CEO of a management consulting firm, told an enthusiastic crowd Monday at Georgia Tech's convention center in Atlanta.

Some voters agree that business experience is vital despite criticism of the economic record of President Bush, who touted his credentials as an "MBA president" when he first ran for the White House in 2000.

"We need a strong businessman who can really help in a time when our economy is taking a turn," Betty Bader, 50, an admissions counselor at a private high school, said after listening to Romney speak at the Pancake Pantry in Nashville Monday morning. "It needs a little shaking up and some help."

'An awful lot of pain'

Some of the nation's economic fundamentals remain solid, including an unemployment rate of 4.9%. That's low by historic standards and well below the 7.3% jobless rate at this point in the 1992 election, in the wake of the recession that ended in 1991.

One-third of Americans now say they're better off financially than they were a year ago.

"I have confidence in the government and in business that corrections will be made to compensate for any of these things," says Rebecca Bechtel, 42, a homemaker and part-time receptionist from Shamong, N.J. She plans to vote for a Republican in the New Jersey primary today, though she's not sure which one.

"There's a lot of panic that's generated by the media," says Carolyn Rashby, 45, a legal editor from Oakland who is leaning toward voting for Clinton in California's primary. "We're not in a recession — but we're not in a good place."

In October, Rashby put a house on the market and hasn't managed to sell it yet. "It's been hard to get a deal and stay in a deal," she says.

The breadth of economic problems across the country has fueled a sense of vulnerability even among those who feel relatively prosperous. A 55% majority of those polled say that during the past three months someone close to them has faced at least one of these problems: losing a job, filing for bankruptcy or facing foreclosure, being turned down for credit or taking a house off the market because it didn't sell.

The telephone survey of 2,020 adults has a margin of error of +/—2 percentage points.

In the past few weeks, perceptions that the economy is in trouble have escalated dramatically. In a USA TODAY poll at the beginning of January, one in four called the economy "poor." By the end of the month, that had jumped by nearly 70%; now four in 10 say it's poor.

"I can see an awful lot of discomfort and pain surrounding us, for sure," says Dave Stein, 38, a police officer in East Amherst, in Upstate New York.

The housing bust in particular has provoked anxiety. A home is the biggest single investment most families make, and Americans had become accustomed to steadily rising housing prices and the wealth that creates. Now, one-third of homeowners say they expect the average price of houses in their neighborhood to drop over the next year. Just one-quarter expect it to increase.

"If we were to sell our house, I feel we'd be lucky at this point to get the same price we bought it for (in 1999), even though we've put probably $40,000 into it," Stein says. "That's a little bit disheartening." He plans to vote for Obama in today's New York primary.

More than four in 10 Americans say they're worried that their house will lose value. One-third fear they won't be able to pay medical or health care costs over the next 12 months. Close to half express concern that they'll outlive their money after they retire.

And precisely half of Americans worry that they won't be able to maintain their standard of living. That's the highest level of concern since the question was first asked in 1991.

Politicians 'need to step up'

That fear strikes a majority of every age group except those 65 and older. It includes half or more of every income group except those making $75,000 a year or more.

Those with the most concern are Americans in the middle — those with annual household incomes of $30,000-$49,999 a year — and those at the bottom. Among those making less than $20,000 a year, two-thirds worry that their standard of living is about to get worse. The traditionally Democratic group now divides by almost 3-1 for Democrats over Republicans.

"For a while there we were doing pretty good — there was food in the house, the bills were paid, there were no bill collectors calling or knocking on the door," says Patricia Lee, 50, of St. Paul. She runs a day care center in her home during the week and works in the stockroom of a local home-improvement store on weekends.

The store has cut back on her hours because of declining business, and families in the neighborhood have found it harder to get state subsidies for the day care services she provides. She is struggling to keep up on her two mortgage payments. For the first time, she's applied for energy assistance to help pay her heating bills.

Her daughter and 5-year-old grandson, who is autistic, are moving back into her home to save on the cost of rent.

"The politicians, they do need to step up and help," Lee says.

She knows exactly how she would use the money if she got a rebate check as a result of the economic stimulus bill now being debated in the Senate.

"I'm going to the store, making sure that there's food in the house," she says. "And I'd put a little towards bills."

She plans to go to Minnesota's caucuses today and back Clinton.

Americans support the economic stimulus bill by 3-1 — a fact that is likely to smooth its way through the Senate and to the president's desk — and many want the government to do more:

•Nearly nine in 10 favor lowering federal income-tax rates for low- and middle-income families. Two-thirds support lowering federal tax rates for everybody.

•About three in four support increased government spending on infrastructure projects such as roads and bridges, an idea that has been floated by Democratic lawmakers.

•Nearly as many support giving federal tax breaks and tax incentives to businesses that invest in new equipment and technologies, an idea that's been floated by Republican lawmakers.

•Two-thirds support extending jobless benefits. A similar proportion back a 90-day moratorium on home foreclosures and a freeze in adjustable mortgage rates for five years.

Economists remain divided over whether the economic situation meets the technical definition of a recession: back-to-back quarters of negative economic growth. Government statistics released last week did show slower growth in the last three months of 2007 and a decline of 17,000 jobs in January, the first such drop in more than four years and a possible sign that a recession has begun.

Among the public, Americans by an overwhelming 5-1 ratio say economic conditions are getting worse. Even so, they are strikingly optimistic about the prospects for a turnaround: 44% predict the U.S. economy will be growing a year from now. Six in 10 expect their own finances to be better off next year.

That could reflect eagerness for the departure of Bush, whose approval rating remains stuck at a dismal 34%, as well as high — and perhaps unrealistic — expectations for his successor.

"We need change; we need change," says Tina Knoll, 36, the mother of three teenage boys in Groton, Conn., one of the states that holds primaries today.

Knoll's husband has a steady job, but she has been looking unsuccessfully for work as an administrative assistant. In their close-knit neighborhood, she has watched as friends have been forced to put their homes up for sale. She plans to vote today for Clinton or Obama.

"I wish I could hurry it," she says of the November election. "I'm looking for work. I need a job."