Wall Street and Main Street lose faith in Washington
If market faith in Washington can be measured in the recent activity in the Dow Jones Industrial Average, then it's safe to say that both Wall Street and Main Street have lost faith in their elected leaders to get anything done for the economy.
"Global Economy Fears" and "Global Worry" were the explanations for Thursday's huge market drop in the headlines in today's Washington Post and New York Times.
Fear and worry seem to be worthy terms of a global economic crisis, but with Washington hobbled by its own "self-inflicted" crisis on the debt, underscoring much of the concern is the lack of leadership on the economy from every side of government.
"The debt ceiling drama significantly undermined the confidence of consumers, businesses and investors," said Mark Zandi, the chief economist of Moody's Analytics in an interview.
"There is also nervousness that policymakers don't know how to respond to the weak job market and economy. I think there is widespread confusion about the merits of fiscal stimulus and monetary policy, but there is no confusion that whatever policymakers have been doing it hasn't worked to create enough more jobs and bring down unemployment. The vitriolic debate among politicians and economists over the best policy response to our economic problems is also very unnerving to everyone," he said/
CBSNews.com special report: America's debt battle
The new CBS News/New York Times poll shows that concern, with record disapproval for Congress. Eight-two percent of Americans, the highest measure since the poll began in 1977, disapprove of Congress. On top of that, 56 percent of Americans say they are dissatisfied with the way Washington is going and 28 percent are downright angry. Those numbers do not show a lot of faith in Washington to act. In fact, 66 percent of Americans are pessimistic of the ability of Congress to deal with future issues.
That pessimism is not without cause. As Washington spent weeks stabbing itself in the back deal with a self-made crisis, the stock market lost roughly a trillion dollars in value as the Dow erased all of its previous 2011 gains. That comes as the new poll shows 86 percent of Americans think the economy is bad.
Poll: Disapproval of Congress hits all-time high
What's worse for policy makers is that the 62 percent of Americans think job creation should be a higher priority, more than double the 29 percent who say cutting government spending should be the focus of Washington.
Job creation has been anemic at best, with the nation creating 117,000 jobs last month. Though that dropped the unemployment rate to 9.1 percent, it is still too high. The question in Washington is what to do to fix it.
"Bipartisan action is needed to help the private sector and the economy grow - such as measures to extend both the payroll tax cut and unemployment insurance, as well as passing the pending free trade agreements with re-employment assistance for displaced workers, the patent reform bill, and a bipartisan infrastructure bill to help put Americans back to work," said Austan Goolsbee, the Chairman of the White House Council of Economic Advisers in a statement.
But after the months of debt crisis debate, can there be bipartisan action to help spur the economy? Many in Washington are now asking if the debate should have been over job creation and not on debt. And many fear the lessons learned from the crisis over the debt debate have done more damage to the economy.
"Broadly, the collective psyche is on edge and if anything goes wrong it spooks people and they simply freeze and the economy stalls. The bickering among policymakers significantly adds to the angst. Policymakers must act more decisively here in the U.S. and Europe in coming months to ensure that the economy gains traction," said Zandi.
From CBS MoneyWatch.com:
Jill Schlesinger: July Jobs -- Better, but Still Lousy
Larry Swedroe: Stock Market plunge - What to do
Allan Roth: Why I'm Buying Stocks Today
