The Harris Poll #3, January 7, 2008

With all the recent negative economic reports from financial services firms and from major retailers about lower holiday spending, it is not too surprising that Americans are not confident about the 2008 economic outlook. When asked to compare to last year, only one-in five (21%) indicated that they feel more secure financially now, and only a minority (15%) believe the economy will improve in the coming year. In fact, 38 percent of Americans say they feel less secure about their financial situation compared to last year and a plurality (45%) believe the economy will get worse in the coming year.

These are some of the results of a Harris Poll of 2,335 U.S. adults conducted online between December 4 and 12, 2007 by Harris Interactive.

These numbers have significant implications for the health of the economy in 2008. According to David Baron, Vice President of Research for the Harris Interactive Financial Services Group, "Having nearly one-in five Americans feeling that their economic situation is going to get worse will have serious repercussions for the overall economy as well as the 2008 Presidential Elections. This is going to influence voting in the elections because Republicans feel much more positive toward the 2008 economic outlook than Democrats or Independents."

In looking to the year ahead and what Americans expect to do in regards to their finances, just over two in five Americans (42%) say they plan to pay down their level of debt while 41 percent each say they will cut back on their household spending and save more in the year ahead. Additionally, one-quarter each say they will save more for retirement and get rid of one or more credit cards.

In looking at some different financial issues, one third of Americans (34%) are "extremely concerned" that "outsourcing" (i.e., jobs going overseas) will affect them personally. Outsourcing is of particular concern to Democrats (40%), as compared to Independents (35%) and Republicans (29%). A sizable number of Americans are also extremely concerned about "the sinking value of the dollar compared to other currencies such as the Euro or Canadian Dollar" (28%). It is interesting that Americans are slightly more likely to be extremely concerned with the declining value of the dollar than they are about inflation (25%) and rising interest rates (22%).

Republicans are more likely to have positive feelings about the economy (30% feel more secure about their financial situation) compared to Democrats (14%) and Independents (18%). In fact, half of Democrats and Independents (52% each) feel that the economy is going to get worse in 2008. This is in contrast with Republicans where only a third (32%) feels the economy is going to get worse. In keeping with their negative economic outlook, more Democrats (44%) and Independents (45%) indicate they are going to "cutback on their household spending" than Republicans (36%).

In looking at this by generation, those in the middle age ranges have the most concern on the economy. Gen. Xers (those ages 31-42) and Baby Boomers (those ages 43-61) are particularly worried about the economy as a plurality of both generations (40% and 44%, respectively) feel less secure about their financial situation this year. Only one-quarter (27%) of Echo Boomers (those ages 18-30) feel less secure, perhaps showing that they still have a safety net in the form of their parents. In addition, half of Gen. Xers and Baby Boomers (50% each) feel that the economy will get much worse in the coming year in contrast to Matures (41%) and Echo Boomers (38%).

The unsettled 2008 economic outlook will continue to have a negative impact on Americans saving for retirement. Only one-quarter (25%) of Americans indicate that they are going to "save more for retirement" this year. In addition, the mortgage crisis has made many weary about using their home as equity to finance loans. Only four percent of Americans indicate they plan to refinance their mortgage this year, and an even smaller number (2%) are planning on taking out a home equity line of credit.

As Americans head to the polls in both the primaries and the November general election, one thing that almost certainly will be on their minds is the state of the economy, not only in general terms, but also and probably more importantly, how it is impacting them personally and how they feel about the future. Their attitudes on these issues will have a large effect on how they vote. While Democrats tend to feel more pessimistic and Republicans more optimistic, or at least more secure, the decisive voters will be the Independents. Right now, they tend to align more with the Democrats. If that is still true in November, Election Night may not be a happy time for Republicans. But, ten months is a long time and as this economy goes up and down, a lot can still happen.

"Compared to last year, how secure do you feel about your financial situation?"

Base: All adults

Note: Percentages may not add up to exactly 100% due to rounding

"In the coming year, do you think the economy will?"

Base: All adults

Note: Percentages may not add up to exactly 100% due to rounding

"Which of the following do you expect to do in 2008 in regards to your finances?"

Base: All adults

Note: Multiple response question　

"How concerned are you that the following issues will affect you personally?"

Base: All adults

Note: Percentages may not add up to exactly 100% due to rounding

"How concerned are you that the following issues will affect you personally?"

Base: All adults

This Harris Poll was conducted online within the United States December 4 and 12, among 2,335 adults (aged 18 and over). Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was also used to adjust for respondents’ propensity to be online.

All sample surveys and polls, whether or not they use probability sampling, are subject to multiple sources of error which are most often not possible to quantify or estimate, including sampling error, coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments. Therefore, Harris Interactive avoids the words "margin of error" as they are misleading. All that can be calculated are different possible sampling errors with different probabilities for pure, unweighted, random samples with 100% response rates. These are only theoretical because no published polls come close to this ideal.

Respondents for this survey were selected from among those who have agreed to participate in Harris Interactive surveys. The data have been weighted to reflect the composition of the adult population. Because the sample is based on those who agreed to participate in the Harris Interactive panel, no estimates of theoretical sampling error can be calculated.

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