It will get worse before it gets bette

WASHINGTON (Reuters) - The U.S. economic mood took a sharp turn for the worse over the past month, with 40 percent of Americans expecting a recession in the next year, according to a Reuters/Zogby poll released on Wednesday.

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That was a big rise from a month earlier, when 31 percent of the likely voters polled predicted a recession. The darker mood came as mounting concerns about housing and credit markets pounded Wall Street, and oil prices approached $100 per barrel.

"We've had three months now of hammering about an upcoming recession," pollster John Zogby said. "It's clear that voters have internalized that, and they don't have any reason to feel that the government is up to the task."

The poll showed that nearly two in three thought the United States was on the wrong track, and only about a quarter of those polled gave U.S. economic policy high marks.

The survey of 1,009 likely voters, conducted November 14-17, showed the economic outlook was gloomiest in the U.S. West, where the housing downturn has hit California and Nevada particularly hard. Nearly half of those polled in that region expect a recession in the next year, and less than 17 percent thought house prices in their area would rise.

Nationwide, just 27.5 percent of those polled expected house prices in their area to increase in the next year, while nearly 70 percent thought they would stay the same or fall. A growing number -- 11 percent versus 7 percent a month earlier -- expected prices to fall a lot.

Economists and investors are watching closely for signs that the triple threat of housing, credit and oil are curtailing consumer spending. Retailers have been reporting lackluster sales in recent months, and are planning for a sluggish holiday shopping season.

Zogby said a weak holiday season would intensify the negative economic sentiment, and the 2008 election cycle could make matters even worse as candidates use any bad economic news to frame their own policy vision.

"It will get worse before it gets better," he said.

Consumer spending accounts for more than two-thirds of U.S. economic activity, so if the somber mood translates into slower spending, it could prove catastrophic for the economy.

The survey had a margin of error of plus or minus 3.1 percentage points.