Ask someone on Wall Street how the US economy is doing and the response is likely to be “pretty good.” And ask someone on Main Street and they will probably tell you it’s crummy.
In a new CNNMoney/ETrade survey of Americans who have at least $10,000 in an online trading account, over half (52%) gave the US economy as a “C” grade. Another 15% rated the economy a “D” or “F.”
This gloom persists despite the fact that the stock market is on the upswing again. The Dow topped 18,000 Monday for the first time since July 2015.
There’s a vast gap between how Wall Street and Main Street view America right now. Marianne Lake, chief financial officer of JPMorgan Chase, described the economy like this last week: “We have the belief that the US economy is continuing to move in the right direction, that the consumer is on solid footing.”
Compare that to what Jaynee Weiss who lives near Tacoma, Washington, thinks.
“Who isn’t worried about the economy?” Weiss told CNNMoney. “After all, prior to 2007, most of us could say that we didn’t know anyone who had been laid off. That all changed with the layoffs in 2008 to 2010. Our lives have changed drastically.”
People aren’t just worried about how the economy will fare during the next few months, they’re concerned about whether their kids will be able to make it.
Bumpier Ride
The US appears to have endured a dismal first quarter, and Citi doesn’t think the economy will show much more pizzazz in the rest of the year, MarketWatch reported.
The large US bank on Monday cut its growth forecasts for the next two years, blaming a weak global economy, cautious spending by American businesses and a herky-jerky approach by the Federal Reserve.
Drag on the US economy from these headwinds “may be more long-lived than we expected,” Citi economists wrote in their weekly outlook.
In the short run, the damage seems pretty clear. The economy is on track to grow just 0.8% in the first three months of 2016, a MarketWatch survey of economists shows.
A weak first quarter will weigh on the full-year results. The bank predicts the US will grow just 1.7% in 2016 vs. 2.4% in the prior two years. Then the economy will recover modestly and expand 2.1% in 2017, Citi estimates.
Citi previously estimated 2.1% growth in 2016 and 2.4% in 2017. By contrast, the US has averaged 3.2% annual growth since 1948, government records show.
The biggest weight on the economy is slow growth among US trading partners and a strong dollar, the effect of which is to increase the cost of American exports.
“It is unlikely that slow growth among our trading partners will improve quickly,” Citi wrote.
American businesses, for their part, see little reason to increase investment. Slow global growth, an unsettling US presidential election and a market tumble earlier in the year have made executives more uneasy. Consumers are a bit more worried, too.
