WASHINGTON — Investors around the world say President Obama is bad for the bottom line, even though U.S. corporations are on track for the biggest earnings growth in 22 years and the stock market is headed for its best back-to-back annual gains since 2004.
Pessimism about the impact of Obama's policies on the investment climate is common to respondents everywhere, the latest Bloomberg Global Poll shows. At the same time, those outside the United States have favorable views of the president himself, while U.S. investors overwhelmingly have an unfavorable view, according to the quarterly poll of Bloomberg subscribers who are investors, analysts or traders conducted Monday.
The respondents also say the Republican victories in midterm congressional elections, which gave the party control of the House, will be good for business. Pluralities anticipate lower taxes, an improved investment climate and better stock market returns.
"This administration has swallowed and communicated the 'new normal' line far too deeply," says poll respondent Sassan Ghahramani, 47, president and chief executive of SGH Macro Advisors in New York. "More important than even the dispute over tax policy and whether his concrete policies are pro-business or not is his inability to strike an optimistic chord on the future competitive prospects of the U.S."
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Investors are evenly split over their overall impression of the president, though 62 percent of those in the U.S. view him negatively. Worldwide, 63 percent of all respondents say his policies are detrimental to the U.S. investment climate. That number increases to 68 percent among U.S. investors, even though the Standard & Poor's 500 Index has risen more than 43 percent since Obama was inaugurated in January 2009 and corporate profits have rebounded almost to the pre-recession peak reached in 2006.
Obama inherited an economy roiled by financial crisis and a recession that was the longest and deepest since the Great Depression. Gross domestic product growth for 2010, which was forecast to average 2.1 percent the week before he took office, is now expected to average 2.7 percent, according to median estimates from a monthly survey of economists by Bloomberg News.
Among the 452 companies in the S&P index that had reported third-quarter earnings by Nov. 10, profits were up a share-weighted average of 32 percent since a year earlier, with more than two-thirds of companies outpacing analysts' expectations.
The president gets little credit from investors for measures he oversaw to rescue the economy, including the continuation of a bailout of the financial industry begun under President George W. Bush, an expansion of the help for U.S. auto companies and the enactment of an $814 billion stimulus package. Only 1 of 6 investors says the Obama administration's policies have been primarily responsible for the performance of the stock market or economy.
"The uncertainty around the administration's approach to dealing with businesses and the lack of clarity on taxes has created an environment where companies are less likely to make incremental investments, which in turn is bad for future corporate profits and hence the investment climate," says poll respondent Quinten Stevens, 46, managing partner of Stevens Asset Management in Darien, Conn. "Hopefully, the recent election results will be a powerful wake-up call to significantly change their approach towards the private sector."
While respondents are bullish about some aspects of the Republicans' gains in the elections, they don't expect the political shift to have a broader economic impact. More than half of all respondents say they believe Republican control will have little or no effect on job growth or the availability of credit. A 41 percent plurality say the change in party control won't have much impact on the overall economy.
Investors are split on the consequences of the Republican House majority for the budget deficit, which was $1.29 trillion in the 2010 fiscal year that ended Sept. 30. Thirty-six percent see a positive effect, 24 percent a negative effect and 31 percent little or no effect.