Mainers wary of economy > Election controversy blamed

BANGOR – Uncertainty over the outcome of the presidential election lowered statewide consumer confidence levels in October, as is expected by economists during the three months before voting day. Now that it’s three weeks after the election, and there’s still no clear presidential choice, the number watchers are wondering if confidence will rebound as it usually does in January.

A tight presidential race, apparent even in October, left many consumers questioning whether current economic trends would be continuing, or if there would be major changes in national policy, Brian Robertson, research director at Market Decisions, a South Portland polling organization, said Tuesday.

Traditionally, the period between Election Day and the end of the year is a time for consumers to become comfortable with the president-elect and get some idea as to what changes may be forthcoming in the economy, Robertson said. But this year, the election indecision, coupled with an increase in interest rates and an uneasiness over the nation’s energy crisis, has analysts wondering if confidence levels will rebound in January.

“That will be the key,” Robertson said. “That’s when we start worrying that something’s going on in the economy. There might be something of a hangover effect over this whole thing.”

Three indices used to measure Maine consumers’ views of the state and national economies all dropped more than 10 percent between July and October, according to Market Decisions numbers.

In the Index of Consumer Sentiment, the numbers also show that Mainers throughout the year have not been as optimistic about the national economy as consumers are throughout the rest of the nation.

Market Research runs tallies based on similar indices used in the National Consumer Sentiment Survey at the Institute for Social Research at the University of Michigan. More than 400 people statewide are surveyed each quarter, and the October numbers reflect sentiment for July through September.

Statewide, retail sales figures during those three months show a slowdown, said Galen Rose, director of the State Planning Office, and that is reflective of a national trend. Major retailers expect holiday sales to be up this year by 3 to 4 percent, but not up 6 to 8 percent like last year, he said.

“It’s not a bang-up Christmas, but it’s not bad,” Rose said.

Consumers have been on a “spending spree” for a few years because of their confidence in a good economy and a strong sense of job security, Rose said. Some state consumers, however, may have been too confident, incurring high levels of debt and spending beyond their means. A wake-up call about their budget situation may be forthcoming, he said.

“They just can’t keep on doing that – spending beyond their means,” Rose said.

In another survey released by Market Decisions on Tuesday, almost three-fourths of all Mainers say increases in gasoline prices in the last year have affected them financially, and at least half of all Mainers expect prices to continue to go up in the next year.

But 59 percent said they have not reduced spending in other areas to pay for the increases, according to the survey.

“They don’t think they’re taking it [money] out of other things, but they must,” said Curtis Mildner, president of Market Decisions, questioning the validity of respondents’ answers. “Sometimes it might be one of those things where they say one thing and do another.”

If Mainers were to change the way they budget because of high gasoline prices, or change their driving habits, it would have been done earlier this year, Rose said. A change of a dollar a week per tank now “is not a huge amount [of money] to the Maine family,” he said.

“It hasn’t been super sudden,” Rose said. “Much of the increase was some time ago. It’s just not enough to get them to change their spending habits.”

Robertson, however, said the survey focuses more on what people think about high gas prices and how they react to them. He said he believes refiners are three months behind in production of gasoline for next spring, when consumers will increase the amount of time they spend on the roads, and expects gasoline prices to reach $2 per gallon. He blames the backed-up production schedule on refiners needing to catch up on heating oil production.

“It’s a perceptual thing,” Robertson said. “This hasn’t hit Maine yet.”

It will, Mildner said. Many Mainers believe there is nothing they can do about high prices, and blame the increases not on the fact that people are consuming more, but on the actions of OPEC, the government or refiners and suppliers, he said.

“It’s very difficult for them to reduce driving,” Mildner said.

Where Mainers are getting the money to pay for the increase in gas prices is not known, Mildner said, but he believes many are overspending their budgets.

If that continues, he said, “then they’ll have a more serious problem.”