Optimism for the American economy continues to evaporate, even as President Obama readies a supposedly major jobs plan to be unveiled in a speech before a joint session of Congress next Thursday.
Months of sluggish growth, high unemployment, political infighting and market fragility continue to take their toll on American confidence, as polls show that many consumers and business owners agree with a broad consensus among economists that the U.S. is in for several more months of frustratingly slow expansion.
A recent survey of franchise executives, conducted by the International Franchise Association, found that pessimistic expectations for the state of the economy have nearly tripled since March, while optimistic expectations are down by nearly half.
The number of executives who anticipate easy access to credit -- which allows small businesses to expand and create jobs-- also fell to nearly half what it was in March.
The plunge in credit-access expectations is especially noteworthy as the Federal Reserve recently announced its plans to maintain interest rates near zero through the middle of 2013, thus keeping credit cheap. That the franchise owners expect credit to be hard to come by anyway suggests their pessimism runs too deep to be alleviated by the Fed's gesture.
The IFA's findings reflect a wider sense of gloom. Americans' confidence in the economy has been crumbling all summer, according to Gallup, with levels recently reaching their lowest point since early 2009. A separate confidence-tracking study from the Conference Board recently reached a similar conclusion, and a closely watched consumer-sentiment index compiled by Thompson Reuters and the University of Michigan found in August that sentiment had fallen to a 30-year low.
Growth this year has slowed almost to a standstill, and while large corporations have continued to enjoy strong profits, small businesses have been particularly affected by the stall-out. Multiple surveys indicate that small business owners anticipate pain throughout the rest of 2011, with dwindling numbers saying they expect hiring to pick up or economic conditions to get more favorable.
Small-business borrowing was relatively strong in June and July, but tumbled in August, possibly as a result of violent stock market fluctuations and uncertainty over Washington's plan to expand the economy while also reining in the federal deficit.
Obama, who recently met with a number of small business owners during a bus tour through the Midwest, has indicated that his jobs plan will include measures to stimulate small-business growth, as well as creating new infrastructure jobs.
The president's recent nomination of labor economist Alan Krueger to head the White House Council of Economic Advisers suggests the administration is making job growth a top priority. Obama's chances of re-election in 2012 are widely seen as hinging on whether the economy experiences a robust turnaround by then.