Americans facing downturn in the housing market are feeling gloomy about the economic outlook of the country with more than two-thirds believing that the economy is either in recession or will be in the next year, a new poll shows.

The assessment came in a poll conducted for the Wall Street Journal and NBC network by Republican pollster Neil Newhouse with Democratic counterpart Peter Hart.

The survey result would fuel Democratic effort to target business interests in 2008 election campaign, the journal said.

Democrats lead by 35 per cent on handling gas prices, by 24 per cent on energy policy and 10 per cent on dealing with immigration.

Even more notably, Republicans lag by 16 per cent on controlling government spending, 15 per cent on dealing with the economy and nine per cent points on dealing with taxes.

In addition, the paper, said the poll shows a lack of confidence in the economic leaders. That includes not just Bush and Congress, both of whom have the approval of fewer than one-third of all Americans, but the financial industry, large corporations in general and energy, drug and insurance companies in particular.

"The Americans are ambivalent about the current economy but pessimistic about the future," Republican pollster Neil Newhouse said.

One consequence is anger at leading economic actors, who respondents believe are failing to protect ordinary Americans' interests.

Efforts by Republicans and the business community to raise fears about Democratic tax increases, spending excesses or economic mismanagement have proved unsuccessful.

In what Newhouse called a 'world turned upside down,' Democrats enjoy an edge in public approval that extends beyond such party strengths as health care and education, where Republicans trail by more than 20 per cent.

The biggest drag on Republican fortunes remains the Iraq war, which has  depressed the nation's mood across the board, the journal said.

Just 19 per cent of Americans say things in the nation are headed in the right direction, while 67 per cent contend that the country is off on the wrong track.

When those who expressed pessimism were asked to identify a reason, the poll shows, the Iraq war was cited by the highest proportion, 56 per cent. For the first time since the 9/11, terrorist attacks, a plurality of Americans say the US is less safe than before the attacks.

The poll shows Wall Street itself is a target of public ire. Just 16 per cent  expressed substantial confidence in the financial industry, slightly below those expressing confidence in the energy industry (18 per cent) or the pharmaceutical industry (17 per cent). 

Large corporations (11 per cent) and health-insurance companies in particular (10 per cent) fared even worse.

One bright spot for the world of commerce: 54 per cent of Americans expressed high confidence in small businesses, which tied with law-enforcement agencies for the second ranking behind the US military among institutions rated by respondents.