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THE AMERICAN PUBLIC increasingly has little or no confidence in banks, a grim new poll shows. The survey, conducted by the Associated Press and the University of Chicago, shows only 10 percent of respondents have “a great deal” of confidence in banks and other financial institutions. This lack of support was roughly equal in both political parties.
WE WERE TAUGHT BY A VERY WISE MAN, former Federal Reserve Gov. Lyle Gramley, who preached that the key factor for the economy, central banks, governments. etc. is confidence. Without it, contagion lurks, as these institutions lose credibility.
SO THIS GOT US THINKING THIS MORNING: Has every institution suffered a decline in confidence in recent years? The Gallup Organization does great work on this, with a highly respected poll on confidence released every summer. In general, confidence has plunged for virtually every institution in the country in recent years.
CONGRESS HAS THE MOST ABYSMAL RATING, around 10% positive. Both political parties are languishing at around 25% positive, with Joe Biden’s positive rating at 40-45%; Donald Trump’s numbers are below 40%. The right direction/wrong direction poll is stuck, with only about 30% of the public thinking that the country is headed in the right direction.
IN PAST DECADES, SUPPORT FOR THE SUPREME COURT WAS SOLID, but the ferocious debate over nominations and abortion have sent the court’s rating down to 25% positive. Other big declines in the past few years include the criminal justice system, police, the medical system, public schools and organized religion.
AT THE BOTTOM, only slightly better than Congress, are newspapers, the criminal justice system, big business and television news; the latter seems to be increasingly vapid and is next to last in confidence at 11% positive. Support for Big Tech, only recently added to Gallup’s poll, is 26% positive.
WHAT ARE THE IMPLICATIONS?
First, the political system will to stay volatile, with voters likely to be exasperated if their choice is again between Joe Biden and Donald Trump. A third party challenge, usually futile, may have traction this time.
Second, the railroad disaster in Ohio and the San Francisco Fed’s supervisory snooze may swing the pendulum on regulation — the public may become convinced that more may be needed because laissez faire doesn’t always work.
Third, the Fed’s task on monetary policy will be complicated by a clear drop of consumer confidence, which doesn’t always correlate with spending — but this time it may, as shoppers worry about inflation. As for a looming recession, yesterday’s comments from Jerome Powell made that seem more likely.
Fourth, this malaise over banks and the economy and institutions won’t end quickly, as the war in Europe hangs over the West. It may become self-evident — soon — that the correct prescription is not higher interest rates. The markets get that and may drive rates lower; the Fed, slow as usual, faces its own confidence problem.
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