CNBC All-America Economic Survey: Half of the respondents say prices are rising faster than usual

Key Concepts

• Economic Sentiment: Public perception of the state of the economy.
• Inflation: The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.
• Jobs Outlook: Public perception of the job market, including concerns about finding or losing employment.
• Government Shutdown: A situation where non-essential government functions cease due to a failure to pass appropriations bills.
• Tariffs: Taxes imposed on imported goods.
• Bifurcated Economy: An economy characterized by a significant divide between different segments, such as the wealthy and the rest of the population.
• Partisanship: Loyalty to a political party that influences opinions and behaviors.
• Independents: Voters who do not identify with any particular political party.

Economic Sentiment Turns Negative in Q3

CNBC's All America Economic Survey indicates a negative shift in American views on the economy during the third quarter. This downturn is attributed to several key issues: inflation, job concerns, and the impact of the government shutdown.

Inflation and Jobs Data

• Inflation Perception: 75% of those surveyed believe prices are rising.
• Rate of Inflation: 50% of respondents state that prices are rising faster than usual.
• Wage Growth Disconnect: A very low percentage of individuals anticipate their wages will increase, highlighting a disconnect between rising prices and stagnant income growth.
• Jobs Outlook Concerns: A higher-than-normal percentage of Americans are worried about their ability to find a job or their risk of losing their current job.
• Job Availability Perception: Despite concerns, the number of people who believe they can find a job remains "pretty healthy."

Presidential Approval on Economic Issues

• Southern Border: President Trump receives positive marks on the southern border issue.
• Deporting Illegal Immigrants: Views are more negative regarding the deportation of illegal immigrants.
• Tariffs: Sentiment on tariffs has become significantly more negative, with a -15% rating.
• Inflation and Cost of Living: These issues are causing the most concern among Americans, with a strongly negative sentiment.

Investment Preferences

• Stock Market: Americans are not overly pessimistic about the stock market, which has been performing well.
• Gold as Top Investment: Gold emerged as the number one choice when respondents were asked about the best investment, suggesting a preference for perceived safe-haven assets amidst economic uncertainty.

Demographic Breakdown and Partisanship

The survey data reveals a strong partisan divide in economic sentiment.

• Partisan Flip: Opinions on the economy tend to flip depending on which party controls the White House.
• Independent Voters: Independents show a more neutral or slightly negative outlook, with ratings around -30% to -20% on the President's handling of economic issues and the economy itself. This group is seen as a potential indicator of broader public sentiment beyond partisan loyalties.
• Democrats: Show a significantly negative sentiment (-90%).
• Republicans: Show a significantly positive sentiment (+90%).

Impact of the Government Shutdown

The survey was conducted during the government shutdown, and its findings highlight public perception of its economic damage.

• Blame for Economic Damage:
  • 53% of the public blames Republicans and the President for the economic damage caused by the shutdown.
  • 37% blame Democrats.

Expert Perspective on the Economy

Steve Leeman offers an additional perspective, suggesting a "bifurcated economy."

• Wealth Disparity: While stock market returns and general wealth might appear high, Leeman questions the extent to which this wealth is broadly distributed.
• Tariff Disruption: Tariffs are seen as potentially disruptive to small businesses and manufacturing, with impacts that may not be immediately reflected in economic data.
• Hollowing Out of Middle and Lower End: Concerns exist about a "hollowing out" of the middle and lower economic segments, particularly as businesses struggle to adapt to tariff-related cost increases.
• Uncertainty: A significant level of uncertainty is present, which has also been observed in business and small business surveys. This uncertainty is a major factor influencing responses.

Conclusion

The CNBC All America Economic Survey reveals a growing negative sentiment towards the U.S. economy in the third quarter, driven by inflation, job market anxieties, and the impact of the government shutdown. While the stock market may be performing well, this is not translating into widespread positive feelings among the public. Partisanship heavily influences economic views, with independent voters offering a potentially more objective gauge of sentiment. The government shutdown is perceived by a majority as having negative economic consequences, with blame largely falling on Republicans and the President. Expert analysis suggests a bifurcated economy where wealth may not be evenly distributed, and tariffs are creating disruption and uncertainty, particularly for smaller businesses.