Voters are souring on the economy and the government's remedies, according to the IBD/TIPP Economic Optimism Index released Tuesday. It fell 4.1% to 46.8 in February, back to December's level and the weakest since July.
"Persisting high unemployment and a wobbly stock market dampened January's optimism," said Raghavan Mayur, president of TIPP, IBD's polling partner. Readings below 50 signal pessimism.
Gov't Isn't The Solution
Confidence in federal economic policies dived 7% to 38.3, the lowest since President Obama took office. The $787 billion stimulus not only failed to keep unemployment from soaring but helped the deficit explode to $1.4 trillion in 2009, with $1.6 trillion seen in 2010.
Obama has tried to stress economic issues since Scott Brown's stunning Massachusetts election win thwarted health care legislation. He's railed against fat-cat bankers while proposing new taxes and further curbs on the biggest banks.
Obama also is proposing a jobs bill that includes a hiring credit for employers. He met with GOP and Democratic leaders Tuesday to discuss jobs and other issues. Senate Majority Leader Harry Reid hopes to pass an $80 billion package this week.
But some House Democrats have questioned the merits of a jobs tax credit. Many experts say the latest stimulus plans are too modest to make much of an impact.
The National Federation of Independent Business on Tuesday said its January small-business optimism index rose 1.3 points to 89.3, a 16-month high. But the sub-90 reading is still low.
Small-business owners "entered 2010 the same way they left 2009, depressed," William Dunkelberg, NFIB's chief economist, said in a statement. "The biggest problem continues to be a shortage of customers."
But seven of the index's 10 components rose, suggesting better times ahead.
Obama met with Democratic and Republican lawmakers Tuesday to spur hiring among small firms, which create most of the jobs in the economy.
"There are some ideas on both the Republican and Democrat side that allow us to potentially, for example, lower rates for small businesses on their taxes, to help spur on some growth," Obama said.
NFIB said the government hadn't done enough to encourage consumers to shop, adding that 31% of small-business owners cite poor sales as their top problem.
Instead, NFIB said Congress had concentrated on a health care bill "that features crippling taxes and mandates for small firms."
Independents in the IBD/TIPP poll were especially critical of Obama. Their view of federal economic policies tumbled 12.7% vs. January and 30.3% vs. September.
Independents disapprove of Obama's handling of the economy by 2-to-1 (50%-25%). Just 3% think he's doing an excellent job, while 29% say it's unacceptable. Their view of Obama's overall job performance sank 7.9% in February to 40.8, a new low for him. A year earlier, the rating was 72.9.
The IBD/TIPP Presidential Leadership Index fell 0.6 point to 50.2, holding just above the neutral 50 mark thanks to continued strong support from Obama's liberal base. Ominously, three-fourths of independents have a favorable view of the tea party movement and say one-party control of the White House and Congress has been bad.
But while independents took the sharpest downturn in February, Democrats also were less enchanted with federal economic policies and the six-month outlook.
On the upside, Americans' view of their own finances edged up 0.1 point to 53.5, holding in a tight range of modest optimism. But that was well below the pre-recession reading of 60.8 in February 2007.
IBD/TIPP conducted the national poll of 902 adults Feb. 1 to 7. The margin of error is plus or minus 3.3 percentage points.