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Signs of a weakening recovery, a first-ever downgrade of U.S. government debt, plus high volatility and a sharply downward trend in the stock market since spring-all are putting confidence in the U.S. economy to the test.
The Gallup Daily Poll on the nation's economic outlook shows roughly three-quarters of Americans think conditions are worsening. That's up from slightly more than half at the beginning of the year.
Meanwhile, a group of economists surveyed by the Wall Street Journal has grown more pessimistic about the risk of a double-dip recession. The group said the chance of another recession within the next year is 29 percent, up from 17 percent a month ago.
Respondents to the latest RBJ Daily Report Snap Poll are even more downbeat. Nearly two-thirds think the U.S. economy is falling back into recession. Most also are concerned about their investments in the stock market.
However, nearly half said they were optimistic about their own economic situation over the next 12 months.
More than 560 readers participated in this poll, which was conducted Aug. 11 in conjunction with a special ROC City Tonight broadcast by Rochester Business Journal news partner 10NBC.
In your view, is the U.S. economy falling back into recession?
Are you concerned about your own investments in the stock market, which has declined more than 15 percent since April?
Very concerned 48%
Somewhat concerned 37%
Not very concerned 13%
Not at all concerned 3%
Looking ahead over the next 12 months, are you optimistic or pessimistic about your own situation economically?
I don't believe we were ever out of the recession. Until the fundamentals of our economy are fixed, I question our ability to exit the recession.
—Don Eichenauer, Bonadio & Co.
The bottom line for this country right now is jobs. We need Americans working. If Americans are working, we increase the number of taxpayers and business grows. Yes, we need to cut government spending, but creating jobs right now is the best and quickest way back to prosperity. By the way, adding more government-funded jobs is not what I am talking about.
Up until just now, there was still some hope. People still had reason to believe we might pull out of this mess at a point in the foreseeable future. Now things are much cloudier. Spirits are so low. I'm most concerned about young people-teens, college students and young professionals-who are now part of what's increasingly becoming the new "lost generation."
—E. Harper, retired
The world economy may be shaky, but the U.S. economy is strong. Companies have more cash than ever, they are showing good profits and sales have remained strong. Our banks are not in the same situation they were a few years ago; they have much stronger balance sheets.
The charade put on by Washington is the source of the recent panic. The unwillingness of one party to negotiate is hurting the country. Putting the self-interest of a political party (which includes doing anything to make sure the president fails) ahead of the country is treasonous. The individuals in Washington are supposed to work for the people-not corporations. If it continues, we will fall back into a recession. If things continue at the status quo, we may as well change the name of the country to USA Inc.
—Judy Palmieri, Rochester
Does anyone really believe we ever came out of the recession, with unemployment being at around 10 percent for the last two years?
—Floyd Rayburn, FG Rayburn Mason Contractors Inc.
When it comes to the stock market, one person's panic is another person's opportunity. If your portfolio of investments is not balanced, then you have been ignoring history and will repeat its mistakes.
We are in uncharted waters. We are applying old concepts to new problems. We lack leadership. We will be here for a long time.
Let's see: Economies failing worldwide, riots in Great Britain, lost manufacturing jobs never coming back, stock market tanking. I'm more inclined to side with my 80-year-old mother and say it's not a recession, it's a depression!
Peoples' views on their own economic situation may vary widely depending on their age group. As someone who's approaching retirement age, I'm concerned about investments. My husband's small business was a victim of the poor economy and he has been unable to find a permanent job since then. We are probably less optimistic than younger readers because of our personal situation.
Companies have made their cuts and adjustments, have good cash positions and are waiting for the market to improve. Now where are the government cuts? I suggest a 10 percent across-the-board cut in federal government spending—all agencies, all departments, all congressional staffs, etc. Plus, a three-year freeze on Social Security, Medicare, Medicaid. That would wake up the sleeping government and force efficiencies. That is the beginning, balanced spending required thereafter. I would not object to tax increases but only after some rationalization of the huge federal spending binge occurs.
—Mike Dwyer, RIT
For many Americans, the last recession never ended. If you're unemployed or underemployed, the stock market is the last of your concerns.
—Pete Bonenfant, Fairport
If our government maintains its reckless spending spree, the value of the dollar will continue to weaken, affecting not only Wall Street, but stressing the markets in Europe and Asia. At what point will President Obama stop handing out money like it grows on trees? Oh, that's right, we can print more whenever we need it!
I believe we are in a continuation of the first recession with a dysfunctional government and decision-making body.
—Ed Schlueter, president, Medgraph Inc.
There is nothing new in the news to change the slow recovery we're experiencing. Holding the debt limit hostage resulted in the justifiable downgrading but didn't affect the price of our bonds—so a non-event. Europe was in trouble and is still in trouble. No change.
—Bob Green, the Verdi Group Inc.
Our federal government has gone completely off the tracks, rivaling our state government in dysfunction. Can't everyone see the writing on the wall? The "supercommittee" will not be able to agree because the Republicans will refuse to consider revenue, forcing the Democrats to refuse to consider cuts to entitlements. The across-the-board cuts will be enacted (maybe), and each side will blame the other. The situation will deteriorate until the 2012 election, when the side with better advertisers will take power and try to impose their own agenda. What a shame it's come to this!
Stated unemployment rate is 9.1 percent. What isn't talked about is unemployment among blacks is approximately 20 percent; Hispanics, 15 percent; no longer looking, add 10 percent; those educated through high school only, 20 percent. Local urban schools still have dropout rates in the 50 percent range. I could go on. Where is the hope and change that was promised? Is there any hope for change? Is there any hope?
Jobs are not created by government; businesses, specifically small businesses, are the job creation engine of the U.S. economy. A lack of leadership and vision in the White House and Washington in general, coupled with fears over increasing regulation (Obamacare, etc.), has resulted in record business liquidity sitting on the sidelines versus being invested in capital investment for growth. The Fed has run out of rabbits to pull from its hat, and the only thing coming from the president is a need for a "balanced approach" (code = more taxes) to help solve our economic malaise. Without a serious conversation about growing legacy costs associated with Social Security, Medicare, Medicaid, foreign aid and defense spending, all other efforts to the right our economic ship will represent the proverbial can being kicked down the road to future generations.
—P. Hohensee, Webster
I do not expect any relief for the next year and a half until our pathetically incompetent president gets a permanent tee time. In the meantime, we can expect him to make all the insane decisions that are available about how to screw up the strongest economy in the world.
—Bob Worden, Penn Yan
We shouldn't be surprised at this latest economic setback. The failed Keynsian economic policies of big government, big spending and high taxes have been the culprit. The key to economic growth is low taxes and smaller government. The taxpayers are not supposed to be supporting this overcompensated and overstaffed federal and state government. There lies the problem. Put the money in the hands of the more efficient private sector and the economy will recover.
—John Rynne, president, Rynne, Murphy & Associates Inc.
The stock market told us (last) week what it thinks of how the Democrats are running the country. Three years of gains have been wiped away. Economic growth has slowed to a crawl, but it's not a recession, yet. We can't borrow our way to prosperity! We have become a debtor nation of unbelievable magnitude. Democrat-sponsored programs over time, from Obamacare to Social Security, welfare, Medicaid, food stamps and on and on have gotten us here. It is a shame what their "programs" have done to this once-great economy. A nation of enterprising and self-reliant people is becoming a nation of those looking for government handouts! What would our founders think? I feel sorry for the coming generations who have to pay those bills when they come due.
—George Thomas, Ogden
I think the high rollers are taking advantage of the many investors. It has been said there is no shame in what they’re doing. There are none jumping from skyscrapers or committing suicide anymore. It is just doing business.
8/19/11 (c) 2011 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail firstname.lastname@example.org.