The sun might come up tomorrow, but Americans forecast gloom for the U.S. economy
Pessimism over the housing market and overall economy has reached lows not measured since August 2010, according to the National Housing Survey released today by Fannie May.
The share of Americans who feel the economy is on the right track has shrunk to 16 percent in August, down from 23 percent in July. Those who think the economy is on the wrong track now accounts for 78 percent of Americans, up from 70 percent in July.
“I believe the public was looking at the U.S. debt, deficit, and the ensuing political struggle with one eye, and looking at Europe and their sovereign debt issues with the other eye, and saying: “’This is not what we want,’” said Doug Duncan, vice president and chief economist at Fannie Mae, an entity created by Congress to channel funds to mortgage bankers in efforts to expand affordable housing.
The Fannie May survey, which polled more than 1,000 Americans, is the latest to measure plummeting confidence among homeowners and investors. Millionaire Corner found a year-low in confidence among Millionaire investors, shaken by the market tumult following the downgrade of the U.S. credit rating. In August the Spectrem Millionaire Investor Confidence Index fell nine points to a mildly bearish -18. Investors said their outlook was most impacted by the political environment and its bearing on the economy, but they also expressed concern about unemployment, the deficit and international problems.
A growing number of Americans expect their personal financial situation to worsen in the next year , 22 percent in August, compared to 20 percent in July. Fannie Mae also found a slight increase in Americans who report significantly higher expenses compared to a year ago.
More than one-fourth of the Americans surveyed by Fannie Mae said they believed home prices will decline over the next year. On average, Americans expect prices to go down 0.5 percent, compared to 0.3 percent in July. Nearly 70 percent of Americans say it’s a good time to buy a home, but few (9 percent) believe it is a good time to sell one’s home.
Pessimism about the housing market is shared by affluent investors interviewed by Millionaire Corner in June. Only one-fourth believed the housing market would rebound within two years, and nearly 70 percent had a friend or family member who was having difficulty selling their home.