Investor Sentiment Surveys About Obama Can't All Be Right

It's a case of dueling surveys. Two polls released last week and one issued Monday set out to probe how investors view President Barack Obama's economic policies. But they provide contradictory readings.

One released by Bloomberg News says 77% of its subscribers -- mostly high-income individuals in the financial services sector -- think President Obama is against business and can't manage a financial crisis. A USA Today/Gallup poll was also downbeat, finding that 34% of Americans believe it will be four or more years before the economic recovery starts. But not everyone in the Gallup survey, which reached similar findings in July, is ready to stick their heads in the oven."Americans living in households earning $90,000 or more annually are more optimistic about when recovery will occur than are those in households with lower income levels; still, the majority of all income groups expect to wait at least two years before the economy starts to recover," according to Gallup's website.

To further complicate matters, a survey released today by JP Morgan Chase (JPM) found that most consumers believe their personal finances are improving. But they're far less optimistic about general economic recovery (57% vs. 39%), even though the two would seem to be dependent on each other.

"Conflicting Messages"

Wall Street analysts and the financial media spend a great deal of time discussing whether investors are "on the sidelines," "exuberant," "bullish" or "bearish." Though people sound authoritative when they say these sorts of things, gauging market sentiment is guesswork because it's impossible to ask millions investors their mood on a given day. This is tricky even during good times. For one thing, answers are based on emotion, which can swing wildly between joy and despair.

The confusion only is going to get worse. "You are going to see conflicting messages in the data as the economy transitions from recession to recovery," says Ryan Sweet, a senior economist with Moodys Economy.Com, in an interview with DailyFinance. "There has been a lot for investors to digest over the last week."

Just today, Obama, still smarting from the Democrats' loss in the Massachusetts Senatorial race, reiterated his vow to fight for the middle class. He made a variety of proposals, including increasing the child care tax credit, easing student loan payments and requiring employers to set up automatic individual retirement accounts for workers, according to USA Today. In addition, economic adviser Paul Volcker is pushing a proposal that would forbid banks from making speculative investments that don't directly benefit their customers.

"Collision Course"?

These and other proposals, including a controversial new bank tax, are putting Obama on a "collision course" with the financial services industry, and that may have skewed the Bloomberg poll, according to Nigel Gault, IHS Global Insight's chief U.S. economist. Passions also run high over the question of whether Federal Reserve Chairman Ben Bernanke should get appointed to another term. Gault, along with many leading economists such as Mark Zandi of Moodys, believe Bernanke should get approved, as does the U.S. Chamber of Commerce.

It may sound at first blush that Bloomberg's poll is drawing a sweeping conclusion about Americans' sentiment concerning Obama's economic policies. But in an email to DailyFinance, Albert Hunt, Bloomberg's executive editor for Washington, denies that Bloomberg was hyping its survey results.

"It says 'U.S. investors' not the U.S. public and immediately says it's a poll of investors and analysts 'who are Bloomberg subscribers,'" Hunt says. "Anyone misled by that is wearing blinders."

Another complicating factor: The Bloomberg survey and the USA Today/Gallup poll don't take into account recent positive economic data. Indeed, several signs in the U.S. economy have been looking up. Holiday sales rebounded in 2009 from their historical low levels in 2008. All the major stock indexes are up double digits over the past year. The Conference Board Consumer Confidence Index rose for the second month in a row in December.

Of course, the federal deficit is still way too high, and unemployment is expected to linger above 10% for a while. Clearly, many people continue to feel uneasy about the future. And who can blame them? But as these surveys show, getting more precise than "uneasy" isn't so easy.
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