Americans Say They Missed 73% Rise in S&P 500 as Economy Surged

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By Mike Dorning

March 24 (Bloomberg) -- Americans are down on the economyand the markets even as stocks and growth indicators are up.

By an almost 2-to-1 margin Americans believe the economyhas worsened rather than improved during the past year,according to a Bloomberg National Poll conducted March 19-22.Among those who own stocks, bonds or mutual funds, only three of10 people say the value of their portfolio has risen since ayear ago.

During that period, a bull market has driven up thebenchmark Standard & Poor’s 500 Index more than 73 percent sinceits low on March 9, 2009. The economy grew at a 5.9 percentannual pace during last year’s fourth quarter.

“It’s very difficult to turn perceptions around onceyou’ve been through the proverbial economic wringer,” says MarkZandi, chief economist for Moody’s Economy.com. “Everything iscolored by the fact that unemployment is near 10 percent. Itdoesn’t really matter what you ask, you’re going to get the sameanswer.”

Zandi says the poor performance people report on theirinvestments “is very telling. It’s just a fact that everyone’sstock portfolio is up, or nearly everyone’s.”

Even among investors with annual incomes exceeding$100,000, and who might be expected to follow their financialholdings’ performance, more say they have lost money comparedwith a year ago than say they have made money.

J. Ann Selzer, president of Selzer & Co., a Des Moines,Iowa-based company that conducted the survey, says thedisconnect is typical of the way Americans think about theeconomy.

‘Everyday Life’ Indicators

“Economists look at their indicators and the Americanpeople see indicators in their everyday life,” she says. “Itis hard to argue with what people observe in their owncommunities.”

The poll also finds that Americans remain skeptical aboutthe health-care overhaul even after the U.S. House passed thelegislation March 21, with fewer than 40 percent of respondentssaying they favor the plan. While most say the government shouldplay a role in ensuring everyone has access to affordable care,a majority say health care is a private matter and consider thenew rules approved by Congress to be a government takeover.

Wrong Track

A sense of despair pervades perceptions of the economy andnation. Barely one-in-three Americans say the country is on theright track. Fewer than one in 10 say they believe the economywill be strong again within a year. Just 4 percent of Americanswho cut back on spending during the recession now say they areconfident enough to open their wallets, according to the poll,which has a margin of error of plus or minus 3.1 percentagepoints.

Poll respondent Lynn Heath, 31, a Belleville, Illinois,stay-at-home mom with four children whose husband lost his job18 months ago and since has only been able to find part-timework, says her family has nearly depleted its savings.

“We don’t have cable. We don’t have internet. I justlearned how to make laundry soap. For $4, I can make two-and-half gallons,” Heath says.

The Obama Administration has made no progress over the pastthree months convincing the public that the $787 billionstimulus package passed last year either helped the economy orprevented greater deterioration. Only 37 percent of the publicsay they see positive effects, the same portion who said so in aDecember poll.

Economic Deterioration

Asked about a range of economic measures, people say theyhave seen deterioration over the past year: 54 percent say thecondition of businesses in their community has worsened and 56percent say the value of homes in their community dropped duringthe period.

Poll respondent Jim Buyer, 47, an electric utility linemanfrom Syracuse, Indiana, says that his impression of a worseningeconomy comes from cutbacks in overtime on his job and hisobservations as he drives to and from work along an industrialroad that services home suppliers, toolmakers and recreational-vehicle manufacturers. Media reporting on the economy may be“slanted,” he says, and what he sees has greater credibility.

“We see the traffic in front of where we work,” Buyersays. “A couple of years ago it was hard to pull out atquitting time. Now you almost don’t even have to look becausethe traffic is so slim.”

Most Important Issue

Half of Americans say they believe the economy orunemployment is the most important issue facing the country.Health care was cited by 22 percent, followed by 20 percent whocite the federal deficit and government spending. Just 5 percentsay the war in Afghanistan.

Unemployment in February was 9.7 percent. Payrolls in theU.S. have dropped every month except one since December 2007.Economists expect job growth to turn around in March, with amedian forecast that payrolls will rise by 192,000.

Poll respondents rate persistently high unemployment thegreatest threat to the economy over the next two years, with 75percent calling it a high threat. Chronically high budgetdeficits are cited as a high threat by 70 percent, followed byhomeowners who can’t pay their mortgages, which is cited by 58percent. Higher taxes are deemed a high threat by 57 percent.

Nine of 10 Americans believe that cutting the deficit,which is projected to reach a record $1.5 trillion this year,will require sacrifices from middle-class Americans. Still, whenasked about a range of potential tax increases and spending cutsto address the problem, the large majorities of Americans favortax increases that only affect the wealthy.

More than three of four Americans say deficit-cuttersshould consider removing the cap on earnings covered by theSocial Security tax, currently set at just under $107,000. Morethan two-thirds say repealing the tax cuts for wealthy Americansenacted by President George W. Bush should be considered.

Soda Tax

Smaller majorities favor considering three other options: areduction in annual cost of living increases for Social Securityrecipients, which 52 percent say should be considered; cuts inspending on public works, which 54 percent say should beconsidered; and a penny-an-ounce tax on sugar-sweetened drinksamounting to 12 cents on a 12-ounce can of soda, which 57percent say should be considered.

Majorities say other options shouldn’t even be on thetable. Among them are higher out-of-pocket payments for Medicareservices beyond basic care, an increase in the eligibility agefor Medicare, a 2 percent increase in income-tax rates onmiddle-class Americans, and elimination of the home-mortgageinterest deduction.

To see methodology and exact question wording, click on theattachment tab at the top of the story.