A poll on pocketbook issues -- and your chance to weigh in

The country is in a surly mood about the economy, energy prices and inflation prospects, a Los Angeles Times/Bloomberg poll suggests.

But many people aren't feeling surly enough to say no to government help for strapped homeowners -- or to say no to a boost in the capital gains tax rate.

I'm highlighting here some of the findings in the nationwide telephone poll of 2,208 adults conducted May 1-8 -- and inviting blog readers to chime in with their views.

Here goes:

--The economy: Those tax rebates landing in Americans' mailboxes aren't doing a lot to brighten the mood. Most people in the poll (78%) believe the economy is in recession, and few see much hope for things to improve in the next six months. Just 19% of all respondents predict the economy will be in better shape in six months, while 37% say things will be worse and 40% see things staying about the same.

The rally in stock prices since mid-March indicates much more optimism about the economy on Wall Street than on Main Street. Who's going to be right this time?

--Crude realities: Almost no one believes oil prices will come down -- which naturally means this would be the perfect time for prices to break because it would contradict conventional wisdom. Asked where they expected oil prices to be in one year (compared with the cost of about $119 a barrel at the time of the survey), 67% of all respondents predicted higher prices. Just 14% predicted a lower price and 14% said they expected the price to be about the same.

--Inflation angst: The majority believe inflation will continue to rise over the next year from the current annualized rate of 4% in the consumer price index: Sixty-one percent of respondents expect inflation will be higher in the next 12 months. Just 11% foresee lower inflation.

If the public is right on inflation, the Federal Reserve will be hard-pressed to keep holding short-term interest rates at 2% -- and there will be a lot of shocked investors in the Treasury bond market, where a 10-year note now pays just 3.9%, or less than the current inflation rate.

--Housing help: In something of a surprise to me, 60% of respondents said they supported "the federal government providing assistance to individual homeowners who have been caught between rising mortgage payments and falling home values." Just 25% opposed the idea of government help; 15% said they weren't sure.

But I wonder if the majority would have had the same view if the question had been phrased differently -- say, to include the words "taxpayer-funded bailout." Some respondents' idea of "government assistance" may not extend that far, but we can't tell from the simple poll answers of "support" or "oppose."

In any case, there is more sympathy for government help for struggling homeowners among lower-income groups than higher-income groups. Among poll respondents earning less than $40,000 a year, 68% support the idea of government aid. Among those earning $101,000 or more, just 40% are in favor.

--Capital gains give-back: Investors seem to be mentally preparing themselves for an increase in the long-term capital gains tax rate, which many people presume would be on the agenda if either Hillary Clinton or Barack Obama wins the White House.

Asked if an increase in the tax rate to 20%, from the current 15%, would cause them "to sell shares, for tax reasons, that you otherwise would not sell," just 20% of people who own stock said they would be motivated to sell. By contrast, 66% said they wouldn't sell; 14% weren't sure. The results weren't materially different for investors above and below the $100,000 income line. For example, 65% of those earning between $60,000 and $100,000 said the prospect of a tax increase from 15% to 20% wouldn't drive them to sell, and that was echoed by 70% of those earning $101,000 or more.

There is a threshold for pain out there with a higher capital gains tax rate, but 20% apparently isn't it.

Comments

[Rocky]

I suspect that a lot of middle income people have not figured out that the Obama and Clinton tax increases on dividends and capital gains are going to hurt them, even though their annual income may be well below $200-$250K. An early retiree may see her Federal tax on dividend income go from 0 in 2008 to 15% in 2009. I wonder whether the McCain campaign will be smart enough to make this tax increase on middle income taxpayers very clear to the electorate. So far it has not.

[CC]

People who came up with this 3.9% CPI must be E.T's. The other possibility is that these experts don't eat and drive out of their own pockets. Or, they live at 1600 Pennsylvania Ave who don't know gas is at $4/gallon.

[Deward Bowles]

That is in fact false information from Rocky and has been debunked by factcheck.

http://www.factcheck.org/askfactcheck/would_raising_the_capital_gains_tax_rate.html

Rocky also probably believes that the gas tax holiday is a good idea. It is a good idea if you are big oil because they are the one that will recieve the money, not the consumer and will actually cause gasoline prices to rise even higher.

You want the same vote for McCain.

My vote is for Obama.

[A Rothman]

CC needs to understand that while many items in the CPI rise, other things fall.

I don't know if computers are in the CPI, but I can tell you that prices have steadily declined over the last several years. This is negative inflation that wipes out positive inflation. People need to stop focusing on the negative and focus on all of their purchases to determine inflation.

[Joel]

I don't know...but am I the only one that's not really having any problems?

Yes, the cost of gas had gone up...but I drive a car that gets good gas mileage. Yes, the cost of food has gone up...but I buy in bulk, make meals ahead, freeze food and shop at the least expensive grocery store in my city. I don't eat out much...maybe once a week at best. I've managed to cut my household expenses by 15% from last year...mostly by practicing conservation and planning meals.

I carry no credit card debt, save money every paycheck, contribute to a 401K, am starting to invest in stocks, opened a Roth IRA, am saving money to complete a financial cushion, replace my car and buy (hopefully) a condo.

I work two jobs, one in financial services and the other at a restaurant, neither are glamorous nor overpaid. And I'm not looking for kudos or a cookie but am trying to get across the point that, with effort and concentration to a goal, you CAN accomplish anything. Anyone can! Peace.

[Kurt]

I read your story in the LA Times "Oil Weighs Heavy on outlook". Thanks for the surveys. Since, I have made lots of money going against the public (long oil and commodities and short crazy lenders and homebuilders) for quite some time now. Now the latest crying tells me its almost time to short oil and agriculture.The same fools that lined up for easy credit with stupid exotic mortgage loans are now answering surveys and crying the blues. By the way, according to government data we are NOT in a recession. GNP was been up .60% each of last 2 quarters. Do any of these folks read? The only thing that would change my mind is if the democrats put a "windfall profits tax" on oil companies. That will drive the price up oil up and murder the economy. The worst President in my lifetime, Jimmy Carter, did that and killed oil exploration. It seems are to believe those fiscal fools in Washington want to do it again. Amazing. But, whatever they do, I can make money
on it.

[RMD]

Your not the only one...everyone is being affected nation wide. This is a straight result of B.S. policies that Ronald Regan and the Republicans put in effect years back. Now we have the Bushes promoting the same type of "REGANOMICS" and with the added favors to the big oil company CEO buddies.
We were warned years back that this would be the long term affects of Ronald Regan's elbow rubbing the rich with his stupid theroy of trickle down economics. In those years, I heard professors at the university foresee the future. They were in disbelief that our government was implementing these policies and just nodding their heads in disbelief, stating that these policies were going to be paid back dearly by Americans in 20 years. I can not believe Americans are so stupid to listen to these idiots on talk radio and so called conservatives (including the undercover gay ones) politicians saying that Regan was the greatest president ever. Just a bunch of brain wash donkey crap.
There's need to be a new poltical party that is wise on the economic issues of Amercians. The Repbulican party needs to be abolish - they are not helping the average American nor the US in general. This so called Republican party is hurting every American family - no matter what is your beliefs or political stand.
I am not even a democrat, but this year, i'm voting for the brother man-obama.