Bad economy tops voters' minds
Nearly half of Americans think the economy is most important in deciding who should be the next president, according to a new CNN survey.
NEW YORK (CNNMoney.com) -- As election day draws nearer, the economy is becoming the defining issue for more Americans as they size up the candidates, a poll released Wednesday shows.
A national CNN/Opinion Research Corp. poll found that 48% of respondents think the economy is now the most important factor in deciding how they will vote in the upcoming presidential election. That's up from 42% in June and 35% in January.
The economy was by far respondents' largest concern. Of the more than 900 registered American voters surveyed in the poll, conducted July 27-29, only 18% said the Iraq war was the most important factor, and 13% said health care was most crucial.
The results have a margin of error of plus or minus 3 percentage points.
It's no surprise that Americans are concerned about the economy. Consumers are facing sinking home prices, a tight credit market, fewer jobs and rising prices. Stocks also have slipped about 18% from their highs set last October.
With gas prices still over $4 a gallon in much of the country and food costs jumping, inflation probably hurts Americans the most.
But even as inflation is growing outside of the Federal Reserve's perceived "comfort zone" of 1% to 2% annually, the U.S. central bank on Tuesday voted not to adjust its key interest rate to combat rising prices. That's because of the risks of further weakening the already-battered economy. "Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the committee," the Fed said in a statement.
Though the economy got a slight boost in the second quarter from the economic stimulus package, economists believe that weakness in employment and housing will continue through at least the end of 2008 and probably into 2009.
That means the economic pain will not ease for voters in time for the November election.
"There really isn't anything out there on the horizon that's going to change the economic landscape in a meaningful way," said Wachovia economist Mark Vitner. "Consumers are likely to be very concerned about the economy come election day."
In a section of the poll released last week, 54% of respondents said Democratic candidate Barack Obama would better handle the economy than Republican rival John McCain. Only 43% said McCain's policies would be better for the economy.
"When the economy is bad, it tends to favor the party that's out of power," said Vitner.
But the election is far from settled. In fact, McCain may benefit because of rising inflation, Vitner said.
"Historically, when consumers are concerned about inflation, they vote Republican, and when they are worried about employment, that's when they tend to vote Democratic," said Vitner. "But who knows: there are a lot of people who are critical of the Fed, and the Bush administration, so that may not hold true this year."