Ben Bernanke, the Federal Reserve chairman, cautioned on Wednesday that "the federal budget appears to be on an unsustainable path." The country's growing investor class shares Bernanke's sentiment. In addition, the investor class is unhappy with Obama's managing of the federal budget.
IBD/TIPP analysis shows that one in two Americans (50%) belong to the growing "Investor Class."
In 2009 the federal budget deficit was $1.4 trillion and analysts project it to reach $1.6 trillion for this year. The deficit ballooned due to loss of tax revenues from over 8 million job losses, shrinking corporate tax revenues and increased government spending on stimulus and other programs. Bernanke believes that an "exceptional increase" in the deficit has been necessary to ease the pain of recession.
In the latest IBD/TIPP poll, however, a majority (54%) of the investor class disapproved of Obama's managing of the federal budget. Nearly a third (32%) give him an F and another 22% give him a D. Only 24% give him an A or B.
The sustainability of government debt in Europe has been weighing on the global financial markets. Naturally, the investor class in the U.S is concerned with the sustainability of government debt.
To show financial discipline, the White House on Tuesday demanded a 5% budget cut across-the-board from government agencies.
Americans like Obama more than his policies. The "boost factor" is somewhat less among the investor class than non-investors. In June, for instance, the IBD/TIPP Presidential Leadership Index for the investor class reached an all-time low. Compared to the presidential leadership index of 49.5 for all Americans, the reading for the investor class is only 44.0. The index for non-investors is 57.5.
The Presidential Leadership Index ranges from 0 to 100. A reading above 50 is positive, below 50 is negative.
The investor class also disapproves of Obama on the broader handling of the economy. Nearly one-half (49%) give him a D or F. Only 32% give him an A or B.
The job situation is also a paramount concern among the investor class.
On the job front, the investor class is as vulnerable as non-investors. Fewer investor households are seeking jobs, but fear of future job losses is comparable to non-investors.
Fully 23% of the investor class has at least a member of the household looking for work compared with 35% of non-investors. But concerns for future job losses are similar, with 42% for investors and 41% for non-investors.
The job-sensitive (job seekers or fearful of job losses) segment for the investor class is 51% compared with 55% for non-investors.
Fully 45% of investors give Obama a poor grade for creating jobs and economic growth. Only 28% give him good grades.
Bush tax cuts are set to expire in December. What Congress will do is anyone's guess. On the expiry of Bush tax cuts, the federal dividend tax will jump from 15% to 39.6% and the capital gains will increase from 15% to 20%. Some economists believe it is not prudent to raise taxes on anyone when the economy is still struggling to recover fully.
• Mayur is president of TechnoMetrica Market Intelligence, which directs the IBD/TIPP Poll that was the most accurate in the last two presidential elections.