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Pew Poll: Americans are Pessimistic About Economy
January 24, 2006

Jan. 24 (Bloomberg) -- Americans are more pessimistic about their economic prospects than they were a year ago, with two- thirds of the public rating the U.S. economy in "fair" or "poor" shape, a Pew Research Center poll found.

Thirty-four percent of 1,503 adults polled by the Pew Center said the economy is "good" or "excellent," compared with 39 percent who had a favorable view a year ago. Sixty-four percent rated it fair or poor, compared with 60 percent who said that in January 2005. Self-described Democrats and independents were much less optimistic than Republicans, the poll showed.

A week before President George W. Bush gives his State of the Union address setting out his 2006 agenda, Americans are placing a greater priority on domestic issues, such as dealing with energy prices, reducing crime and protecting the environment, than they were a year ago, the poll found. Defending the U.S. against terrorism remains the top domestic priority of those surveyed.

"Over the last four years, terrorism has just overwhelmed national priorities and it overshadowed these traditional domestic concerns," said Carroll Doherty, the Pew Center's associate director. "All these priorities are coming back gradually."

The percentage of Americans who rate strengthening the economy and the military as a major goal has declined from a year ago. Sixty-six percent of respondents rated improving the economy as a top priority, down from 75 percent in a January 2005 poll. The percentage of Americans who said strengthening the military was a top priority fell 10 points.

Still, 22 percent of adults said they expect the economy to be worse a year from now, compared with 18 percent last January. Twenty percent said they expect it to be better, down from 27 percent who held that expectation last year.

Heating, Health Costs

The cost of gasoline, home heating fuel and health-care are the leading economic concerns among Americans, the poll found. Eighty-two percent of respondents said gas prices are a "very big" or "big" problem for the economy and 87 percent said that's the case for home heating and energy prices. Ninety percent of respondents cited health-care costs as a problem for the nation's economy.

The pessimism runs counter to government economic data. The U.S. economy, the world's largest, grew at an average annual rate of 3.7 percent in the first nine months of 2005, faster than the 20-year average of 3.1 percent and the unemployment rate in December was 4.9 percent. The Bush administration forecasts the economy will expand by 3.3 percent to 3.4 percent this year.

Bush plans to make health-care a focus of his Jan. 31 State of the Union address and has proposed making tax-free health savings accounts more widespread, price disclosure for medical services and making health insurance more affordable for small businesses.

The poll showed that 56 percent of Republicans rated the economy as doing well, compared with 28 percent of independents and 23 percent of Democrats.

"There's a good deal of partisanship in these evaluations," Doherty said. "It's a reflection of the overall partisanship we see in many areas."

The nationwide telephone poll was conducted Jan. 4-8 and has a margin of error of plus or minus 3 percentage points.

To contact the reporter on this story:
Catherine Dodge in Washington at  cdodge1@bloomberg.net

Last Updated: January 24, 2006 16:37 EST