Consumer gloom in July reached its highest level since the recession was near the bottom amid fears that the expansion remains too weak to create many jobs, according to the IBD/TIPP Economic Optimism Index out Tuesday.
Meanwhile, a gauge of small-business confidence retreated in June to a level typical of a "weak or recession-mired economy" as the sales outlook deteriorated sharply, the National Federation of Independent Business said Tuesday.
The IBD/TIPP gauge fell 3.2% in July to 44.7, the lowest since February 2009. Readings below 50 signal pessimism. The six-month outlook sank 3.2 points to 42.8, a 16-month low. It's down 16% since May.
The poll was conducted after the Labor Department said on July 2 that private payrolls grew by just 83,000 in June. It could take several years to absorb the more than 8 million people who lost their jobs during the recession.
"As every day passes, people's patience is running out in terms of being able to find a job," said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner.
Hiring, Consumers Cautious
Weak hiring could keep a lid on consumer spending. May retail sales fell while major chains reported sluggish June results. Meanwhile, home sales and starts have plunged after federal homebuyer tax credits expired in April.
Still, few economists expect a double-dip recession as continued healthy, if slowing, growth in manufacturing and services outweigh concern about Europe's debt crisis and waning government stimulus. Americans aren't so sure.
IBD/TIPP's personal financial outlook gauge fell 1.3 points to 50.9. Readings in the mid-50s are considered normal.
The index of confidence in federal economic policies ticked up 0.1 point to 40.5.
However, the IBD/TIPP Presidential Leadership Index fell 1.5 points to 48.3, the second straight sub-50 reading and the lowest yet for Barack Obama.
Obama's Democratic allies face a tough election battle in November amid perceptions that massive stimulus has done little to create jobs.
Mayur said the official unemployment rate of 9.5% "grossly underestimates" the problem. He said that 29% of households report at least one member looking for a full-time job, which he said points to a true jobless rate of 22%-25%.
"The pain is not reflected by the statistics," Mayur said. "It is the big factor in the decline of Obama's leadership (ratings)."
He added that 58% of Americans aren't confident that the job situation will improve in the next six months and that 40% see a good chance that the U.S. will fall back into recession within the next year.
Separately, NFIB's small-business optimism index fell 3.2 points in June to 89, the first decline in three months. A net -5% of smaller companies expected higher sales, down 10 points vs. May, NFIB said. A net -6% saw the economy improving, off 14 points. A net 1% planned to add staff, no change vs. May.
"The U.S. economy faces hurricane-force head winds and the government is at the center of the storm, making an economic recovery very difficult," said NFIB chief economist William Dunkelberg.
The IBD/TIPP survey showed confidence eroding across the political spectrum. Democrats' economic outlook fell 2.5 points to 58.4, the lowest since March 2009. It was 70 as recently as May. The outlook among independents dropped 4.2 points to 41. Republicans' reading fell 4.2 points to 25.4.
IBD/TIPP conducted the national telephone poll of 852 adults from July 6 to 11.