More than 40% of Americans say that the current political environment is the biggest threat to the economy over the next six months, according to a new survey from Bankrate.That figure is almost five times higher than the next-highest ranked threat. Only 9% of the survey’s 1,017 respondents felt that terrorism posed a risk. Also cited were rising interest rates (8%), a decline in the stock market (7%) and political/economic instability overseas (7%). Nearly 15% of Americans said they didn’t know the biggest threat.
The Bankrate survey was conducted at the beginning of the month, right before this year’s midterm elections. But it’s unlikely that election results will do much to soothe fears.
“I think we’ve had a highly polarized political environment for some time and I don’t think that characteristic is diminishing in any way,” said Mark Hamrick, Bankrate’s senior economic analyst.
“And I don’t think there is any reason to be optimistic about any long-term resolution. We’ll probably be existing in a highly polarized political environment for some time to come,” Hamrick said.
This year’s survey results show an uptick in concern about the political climate: last year, only 38% of respondents believed believed politics were the top threat. In 2016, a staggering 60% surveyed felt that the outcome of the general elections posed a threat to the economy.
Hamrick says he can’t be certain, but believes these concerns have grown over time.
“I think anecdotally, that this level of concern has been rising at least since the immediate time after the financial crisis and Great Recession,” he said.
Last year, survey results were heavily split based on political affiliation. Almost a third of Republicans viewed the political climate as a risk, compared to over half of Democrats. This year’s results didn’t ask for political affiliation, but Hamrick believes the concern falls along the same lines as it has in the past.
“When we’ve done other polling in the not-so-distant past,” Hamrick explained, “it was quite obvious that the highest level of concern was exhibited by Democrats, with Independents in the middle, and Republicans on the lower end.”
Growing concern with age
Concerns over the political environment grew with respondents’ age, education, and incomes.
While the political environment was the top threat chosen by all age groups, more than half of the Silent Generation – people aged 76 and older – viewed politics as a threat to the economy. That’s compared to 32% of younger millennials (age 18-27).
Households with higher incomes and higher education had higher levels of concern about the political environment. Hamrick said that might be driven by higher levels of engagement with the economy among wealthier and more educated consumers.
And according to the survey, respondents are altering their saving and spending habits because of these concerns. Roughly one-third surveyed were starting to save more money, and 23% were spending less.
“It is good to see many Americans making savings a higher priority, but the reality is that still others would benefit by doing the same,” said Hamrick.
“This is a prime opportunity to work to save more money amid improvement in wages and above-trend U.S. growth. Low unemployment won’t last forever. We just don’t know how long. The time to make financial hay, to put more money in the bank, is while the sun is still shining.”
Identifying risk
This growing unease is underpinned by a stable U.S. economy. Hamrick says that identifying risk and having an “imminent” sense of danger are two different things.
“[Federal Reserve Chairman] Jerome Powell will say that while all these risks are very much top of mind, particularly for people monitoring, in terms of the performance of the broadest part of the economy, it doesn’t show itself yet,” Hamrick explained.
Despite the concern people have felt since the general election in 2016, Hamrick points out that we’ll likely end the year with close to 3% annualized growth.
“You are thinking of the ways you’re dying while you’re having a birthday party,” he said. “It’s easy to identify downside risk – and downside risk is persistent.”
Kristin Myers is a reporter at Yahoo Finance. Follow her on Twitter.
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