Despair Spreads As Recession And Debt Debate Drag On
A new Gallup poll reports that “Seventy-three percent of Americans in Gallup Daily tracking over the July 22-24 weekend say the U.S. economy is getting worse. This is up 11 percentage points from the three days ending July 6, and the worst level for this measure since the three days ending March 12, 2009.” That means confidence is back to where it was in the middle of the recession.
Concerns about political wrangling over budget matters are actually only a modest cause of the despair. It has become plain to many Americans that unemployment shows absolutely no sign of improvement. That fact appears in government data. It is also manifested in large layoffs at large companies like Cisco (NASDAQ: CSCO) and Research-In-Motion (NASDAQ: RIMM), each of which was adding workers until recently. Corporate earnings show that margin improvement at many companies is driven as much by cost cuts as sales improvement. The same trend was a significant cause of the the sharp economic downturn in 2008 and 2009.
Home price activity also makes more and more Americans feel poor. Home prices continue to fall along with home sales. Most data point to an ongoing rise in foreclosures and an increase in the number of underwater mortgages. Government figures show that real wages have not risen meaningfully in a decade. The answer to Ronald Reagans’s questions of whether people are better off than they were four years ago is “no.” That may not determine the next election, but it is a sign of a malaise that will not go away.
Between the lines in the Gallup results is a sense that people feel the future of the economy has no direction. It is not being determined by politicians, corporations, or broader trends like a rebound in home prices or the damaged U.S. manufacturing base.
More than anything else, people are reacting to the fact that there is no good news and there has not been any for quite some time.
Methodology of the Gallup poll: Results are based on telephone interviews conducted on a three-day rolling basis in July 2011, ending July 24. For the three days ending July 24, 2011, on the Gallup Daily tracking survey, interviews were conducted with a random sample of 1,529 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia.
Douglas A. McIntyre