Americans' confidence in the economy, their personal finances and the housing market was already sliding ahead of the latest stock-market debacle, according to a Fannie Mae survey released Monday.
Some 70% of respondents say that the economy is moving in the wrong direction, while just 23% think it's headed the right way, according to the survey, conducted from July 5 to July 26. That's the highest level of pessimism since January of 2010.
"For this survey, that's the first time all of those indicators have moved strongly in the same direction," says Fannie Mae chief economist Douglas Duncan. "It's obviously reflecting the fact that economic forecasts have been downgraded in the last few months, and employment numbers and hiring have weakened as well. It's an advance indicator of what's going on in the market this week."
Among the survey's highlights:
- Some 40% of respondents report a significant increase in their household expenses, up from 37% in June. Just 10% say expenses have significantly declined.
- Optimism about personal finances declined for the third consecutive month: 35% of respondents expect their finances to improve over the next year, down from 40% in April.
- About one-quarter of respondents expect home prices to decline, an increase of 5 percentage points since May. Half expect prices to stay the same.
- Only 11% of respondents say it is a good time to sell a home, and fewer people plan to buy their next home – 61%, down from 66% in June. Meanwhile, more Americans think rental prices will go up than go down (46% vs. 43%).
- One in five respondents report significantly higher household incomes over the past 12 months, but nearly an equal number -- 17 percent -- report significantly lower incomes.
- On the plus side, respondents expect housing prices to decline 0.3% over the next 12 months, up from an expected decline of 0.5% in June.
"Up until the last couple of months, the prevailing view was that the driving economic issue was difficulty in housing," Duncan says. "People have seen what's happened with the decline in Europe and the debt ceiling, and that's moved ahead of housing for many folks."