Democrats stopped basking in the afterglow of President Barack Obama's re-election victory and abruptly lowered their outlook on the economy this month, as fears of the "fiscal cliff" dominate year-end headlines, according to the latest IBD/TIPP poll released Tuesday.
The Economic Optimism Index dropped to a year low of 45.1 in December from 48.6 in November, the second straight decline, with sentiment among Democrats falling by 8.2 points to 65.6.
Republican economic sentiment, which hit a record low right after the Nov. 6 vote, dipped 1.1 points to a new low of 23.7 in December. Readings below 50 indicate pessimism.
"Consumer confidence is driven largely by party affiliation," said Raghavan Mayur, president of TechnoMetrica Market Intelli gence, which conducted the poll.
Given the wide partisan disparity, a truer indicator could be how independents feel, he added. They turned slightly gloomier too, slipping to 42.3 from 44.
An earlier run-up in sentiment was first led by Democrats in September, when the successful presidential convention boosted re-election prospects and brightened their views on the economy. The index advanced further in October as Mitt Romney's strong debate performance lifted Republican sentiment.
But the election brought the index back down. A separate survey Tuesday also found it devastated hopes among small-business owners worried about regulation and ObamaCare costs.
The National Federation of Independent Business' sentiment gauge dropped 5.6 points to 87.5 last month, the lowest since March 2010. The share of small businesses positive about the economic outlook fell from a net 2% to a deeply pessimistic -35%.
While Superstorm Sandy had an effect, NFIB said the election was the primary factor.
"The storm had a significant impact on the economy, no doubt, but it is very clear that a stunning number of owners who expect worse business conditions in six months had far more to do with the decline," said NFIB chief economist Bill Dunkelberg.
The survey's December results will likely look worse, if consumers are any indication. In addition to the IBD/TIPP poll's sharp decline, the University of Michigan gauge fell this month for the first time since July.
In the latest IBD/TIPP poll, confidence fell nearly across the board, especially among Democratic-leaning groups such as women, Hispanics, and those earning $30,000-$50,000.
The looming fiscal cliff of tax hikes and spending curbs may be the dominant story line, but TechnoMetrica's Mayur also noted that gasoline prices remain high and the job market has yet to gain significant traction.
The U.S. economy has added an average of 151,000 jobs a month this year, a bit worse than in 2011 and just barely enough to keep up with population growth.
Regionally, the Northeast was the only area with improved sentiment, helped by post-Sandy relief efforts partly reversing November's 5-point fall.
GOP sentiment trended in the low- to mid-30s for most of Obama's first term and likely will head back there from today's record low, Mayur predicted.
"Republicans still have yet to recover from a hard-fought election," he said.