Economic Discontent Deepens as Inflation Concerns Rise
Growing Rich-Poor Divide in Affording Necessities
Summary of Findings
Public views of the U.S. economy, already quite negative, have plummeted since January. Just 17% currently rate the nation’s economy as excellent or good, down from 26% last month. The percentage of Americans rating the economy as “poor” has increased even more dramatically, from 28% to 45% in one month.
Moreover, there has been a modest rise in the proportion of Americans who view their own finances negatively, though personal financial ratings continue to be more positive than opinions of the overall economy. A majority of Americans (53%) now say their financial situation is only fair or poor, up from 49% in January.
Fully 58% of the public says that their incomes are falling behind the rising cost of living. This compares with just 44% who expressed this view in September 2007. And the impact of the real estate slump is becoming apparent to American homeowners. The percentage of homeowners reporting that their home has increased in value during the past few years has fallen from 84% in October 2006 to 67% currently.
The latest national survey by the Pew Research Center for the People & the Press, conducted Jan. 30-Feb. 2 among 1,502 adults, finds that several factors are driving the public’s economic pessimism, including concerns about the availability of jobs as well as problems in the housing market. However, rising prices — for gasoline or energy, healthcare, or overall inflation — are mentioned most frequently as the nation’s biggest economic problem.
Overall, 24% cite concerns over prices — with the cost of energy and healthcare mentioned most frequently — as the most important problem facing the country. By comparison, 18% volunteer jobs as the nation’s biggest economic problem, while 13% cite housing — including 6% who specifically cite the sub-prime mortgage crisis.
The general sense that prices have risen rapidly in recent years is much more prevalent now than at the beginning of the Bush administration. Overall, 79% of the public says that over the past five years prices have risen “a lot;” in June 2001, 63% said that prices had increased a great deal over the previous five years.
People’s personal financial concerns are more varied, and differ considerably along socioeconomic lines. The leading personal financial concerns of the poorest Americans are healthcare costs, jobs, and simply not having enough money to get by. By contrast, the leading concern among wealthy people is retirement and Social Security.
Substantial numbers of people with very low annual incomes — less than $20,000 a year — say they have difficulty affording basic necessities. Nearly three-quarters (74%) say they have difficulty affording gasoline, 65% report problems affording heat and electricity, and half have trouble affording food.
The gap between the wealthiest and poorest people in the difficulty they report in affording basic items is much wider now than it was in 1992. About a quarter of all Americans (23%) say they do not have problems affording any of six basic necessities, ranging from food to healthcare, up from 16% in 1992. However, the shift has come entirely among those in the top income categories; about as many people in the lowest income category say they have difficulty affording these items as did so in 1992.
The recent rise in the percentage of Americans who say that their incomes are falling behind the cost of living has come largely among middle-income and poor people. Roughly seven-in-ten (71%) of those with household incomes of less than $50,000 a year say their incomes are falling behind the cost of living, up 16 points since last September. By contrast, only a third (33%) of those with household incomes of $100,000 a year or more say their incomes are not keeping pace with the cost of living, up modestly since September (four points).
Similarly, a growing number of Americans who describe their households as “working class” — a group that makes up 47% of the general public — say their incomes are falling behind the cost of living. Fully 62% of self-described working class people say their incomes are falling behind the cost of living, up from 45% in September 2007. People who say their households are “struggling” (15% of the public) remain most likely to say their incomes are falling behind (85%). A much smaller proportion of self-described “professional or business class” people (32% of the public) say their incomes are falling behind (40%), and there has been only a modest increase since September in the percentage expressing this view (six points)
The survey shows that a large majority of Americans (82%) believe that an economic recession is very likely (36%) or somewhat likely (46%) in the next year. While fewer Republicans than Democrats say that a recession is very likely, a large majority of Republicans (80%) say they think a recession is at least somewhat likely in the next 12 months.
The bipartisan economic stimulus plan recently approved by Congress, which was signed by President Bush Feb. 13, is viewed positively by most of those familiar with the proposal. Overall, 61% of those who have heard something about the stimulus bill say that a plan focused on cash rebates to individuals and families is a good idea. Majorities of Republicans (66%), Democrats (63%) and independents (54%) who have heard something about the plan express positive views of the idea.
However, as other national surveys have found, relatively few people say that they plan to spend the money if they receive a rebate from the government. Just 19% say they would spend a rebate, while 47% say they would pay off bills, and 23% say they would save the money.
For all of the negativity about the economy, a plurality of Americans (41%) name the United States as the world’s leading economic power. Three-in-ten (30%) say China is the top global economic power, while smaller numbers name Japan (10%) and the countries of the European Union (9%). In January 1989, twice as many people named Japan as the world’s leading economic power as named the United States (58% vs. 29%).
The survey also finds:
- Nearly half of Americans (46%) who rate the economy as only fair or poor blame President Bush a great deal for the nation’s economic problems. That is greater than the percentage saying Congress (31%), multinational corporations (31%), banks and other financial institutions deserve a great deal of blame for national economic problems.
- A majority (53%) says that jobs in their area are difficult to find, the highest percentage expressing that view since March 2006. Only about a third (34%) says there are plenty of jobs available in their community.
- Just 31% of Americans believe that it is a good time to invest in the stock market, down from 40% in September 2007. The percentage saying it is a “very bad” time to invest has more than doubled since then (from 7% to 18%).
- Far more Americans are paying close attention to economic news than did so last fall. The Weekly News Interest Index found that in early February, 40% said they followed news about the economy very closely. In October and November, only about a quarter of Americans tracked economic news very closely.
Views of the National Economy
Public assessments of the nation’s economy have slipped considerably since last month. More than eight-in-ten Americans (81%) now say the economy is in fair or poor shape, and fewer than one-in-five Americans (17%) rate it as excellent or good, a nine point drop from the 26% who offered that view in January. Negative ratings of the economy have reached levels comparable to those seen during the recessions of the early 1990s and early years of the current decade.
Republicans continue to rate the economy more positively than do Democrats and independents; three-in-ten Republicans (30%) say economic conditions are excellent or good, compared with just 9% of Democrats and 16% of independents. But the party gap has decreased over the past year; in February 2007, the difference in positive views of the economy stood at 41 percentage points (56% of Republicans vs. 15% of Democrats).
Until recently, the narrowing gap between Republican and Democratic views of the economy reflected growing dissatisfaction among moderate and liberal Republicans. The change over the last month, however, comes primarily from a sharp decline in positive ratings among conservative Republicans. Only about a third (34%) of conservative Republicans offer a positive view of the economy, down from 54% in January.
Comparisons With ’92
The public’s ratings of the national economy now are nearly as poor as they were in early 1992. Currently, 17% rate the economy as excellent or good, only somewhat more than in January 1992 (12%).
In other respects, however, public opinions about the economy are far less negative than they were 16 years ago. Currently, just 34% say that there are plenty of jobs available in their area while 53% say jobs are difficult to find. But the public had a much bleaker outlook on employment in January 1992 — just 12% said jobs were plentiful, compared with 79% who said jobs were difficult to find.
About half of Americans (52%) now say it is easy to afford the things in life that they want; 45% say it is difficult. In January 1992, 39% said it was easy to afford things generally, while a solid majority (58%) said it was difficult.
Perhaps the most striking difference with 1992 is the economy’s relative importance on the list of leading national problems. In January 2008, 34% volunteered the economy as the most important problem facing the nation — more than double the percentage that cited the economy a year earlier (15%). But in January 1992, fully 76% named the economy as the most important problem facing the nation (See: An Even More Partisan Agenda for 2008, Jan. 24, 2008).
Nearly half of Americans (46%) say that home prices in their area have gone up in the past year while 41% say that prices have declined. Views about the local real estate market have changed little since September 2007; at that time, 50% said prices have gone up while 40% said prices have declined.
Homeowners, particularly those who hold mortgages, offer a strikingly different view of short-term home prices than do non-homeowners. Nearly half (49%) of homeowners who are paying a mortgage say that home prices have declined in the past year; that compares with 39% of homeowners who own their houses outright, and just 32% of non-owners.
Mortgage holders also are more likely than those who own their homes outright, or non-homeowners, to cite “declining real estate values” as the economic issue that worries them most. About one-in-five mortgage holders (19%) say they are most worried about falling real estate values, compared with just 6% of homeowners with no mortgage, and 7% of non-owners.
Two-thirds of all homeowners (67%) say that, over the past few years, the value of their own home has increased, but that represents a substantial decline since October 2006 (84%). In addition, the proportion of homeowners saying their house value has increased “a lot” has fallen from 46% then to 25% today. In this case, there are no substantive differences between mortgage holders and those who own their homes outright.
Homeowners and non-homeowners alike say that the price of homes in their area will go up at least a little over the next few years. A majority of the public (55%) — including identical percentages of homeowners and non-homeowners — say that home prices will increase in coming years. In September 2007, 53% of the public said they expected home prices to rise, but last June somewhat more Americans said they expected home prices to go up in coming years (62%).
Bush Blamed Most Often for Economic Problems
Nearly half (46%) of people who rate economic conditions as only fair or poor say that President Bush deserves a great deal of blame for the nation’s economic problems. Far fewer blame Congress, major corporate and financial institutions, labor unions, or Federal Reserve Board Chairman Ben Bernanke.
Opinions about Bush’s responsibility for U.S. economic problems break down along partisan lines. Fully 66% of Democrats who rate the economy as only fair or poor say they blame Bush a great deal for the nation’s economic ills. That compares with 44% of independents and just 17% of Republicans. However, a majority of Republicans (56%) who give the economy a negative rating say that Bush deserves either a great deal or fair amount of blame (17% great deal/ 39% fair amount).
About three-in-ten people (31%) who say the economy is only fair or poor say that Congress deserves a great deal of blame for this. Comparable percentages of independents (33%), Democrats (31%) and Republicans (30%) who rate the economy negatively blame Congress a great deal.
An identical percentage (31%) of those who say the economy is doing only fair or poor say multinational corporations deserve a great deal of blame for the nation’s economic problems. This belief is more particularly prevalent among older Americans, less educated people and those who describe their households as working class or struggling. In addition, more Democrats than either independents or Republicans blame multinationals a great deal for the nation’s economic troubles (36% of Democrats vs. 28% of independents and 24% of Republicans).
Leading Global Economic Power
Despite the public’s current gloomy evaluations of the economy, 41% name the United States as the world’s leading economic power, compared with 30% who name China. Just 10% point to Japan as the top economic power, while about the same number (9%) names the European Union; in 1989 and 1990, just 4% said that the “countries of the European Economic Community” were the greatest economic power.
More than twice as many college graduates say the United States, rather than China, is the world’s leading economic power (51% vs. 24%). By contrast, opinions are more evenly divided among those with some college and those with no more than a high school education.
There also are sizable political and ideological differences in opinions about which country is the leading global economic power. Roughly half of both conservative Republicans (53%), and moderate and liberal Republicans (48%) say that the United States is the leading economic power; that compares with 42% of independents, 38% of conservative and moderate Democrats, and just 34% of liberal Democrats.
Personal Financial Situation
Americans give more positive ratings to their own financial situation than to national economic conditions. Fewer than half (45%) say they are currently in excellent or good shape while a slight majority (53%) are in only fair or poor financial shape. People’s ratings of their own personal financial situation have fallen slightly from January, when 49% said they were in excellent or good shape and an equal number said they are in only fair or poor shape.
Compared with 1992, people’s ratings of their own personal financial situation are more positive now (45% vs. 36% in January 1992). Overall, ratings of the national economic conditions have fluctuated more since 1992 whereas ratings of people’s own personal financial situation have remained much more stable over that same time period.
Most people with household incomes greater than $50,000 a year rate their finances positively. By contrast, just 29% of those earning $20,000-50,000 and 12% of those earning less than $20,000 are in excellent or good financial shape.
People rate their financial situation differently depending on their self-reported class. A large majority (73%) of those who describe their households as professional or business class rate their finances positively; that compares with 40% of those who say they are working class and just 6% of self-described struggling people.
There are also differences in how people rate their personal financial situation based on their party identification. More Republicans (56%) than independents (49%) or Democrats (35%) say their finances are in excellent or good shape. These partisan differences are partly due to the fact that Republicans generally have higher annual incomes than either Democrats or independents.
Employment status is also related to people’s ratings of their own personal financial situation. More people who are employed say they are in excellent or good shape financially compared with those who are not employed (50% vs. 36%). Among those who are not employed, far more retirees than other unemployed people, including students, give positive ratings to their personal finances.
Top Financial Problems
People say that they are facing a wide array of personal financial problems, with employment or jobs (13%), healthcare (12%), housing (9%), retirement and social security (8%), and not having enough money (8%), mentioned most frequently.
Healthcare is a much greater concern for people whose annual incomes are less than $50,000 than for those with higher incomes. Among those in the lowest income category (less than $20,000 annually), about as many people cite healthcare (18%) as their biggest financial problem as mention jobs (17%) or not having enough money (15%). In contrast, healthcare is cited by 9% of those in the $50,000-$100,000 income category and 7% of those with incomes above $100,000.
Wealthier Americans have somewhat different financial concerns. Those in the highest income category cite retirement or Social Security is their biggest financial problem (12%), twice the percentage in the lowest income group (6%). However, concerns over housing are widely shared across all incomes groups; roughly 10% in each cite housing and mortgage issues as their biggest financial problem.
Which National Issues Hit Home
When asked what worries them most among several current economic issues, 35% say they worry most about rising gasoline prices, while 28% say they worry most about healthcare costs. By comparison, 12% cite declining real estate values and an equal number cite rising food prices. Despite recent fluctuations in the stock market, only 7% overall cite stock market volatility as their top economic concern.
Rising food prices are a major concern for the poorest Americans; 26% of those in the lowest income category say they are most worried about this. Just 7% of those with household incomes of between $50,000 and $100,000, and even fewer wealthier people (3%), say they are most worried about rising food prices.
Conversely, just 3% of those with household incomes of below $20,000 are most concerned with volatility in the stock market and only 5% with declining real estate values compared with 14% of those earning more than $100,000.
Many Find It Hard to Afford Necessities
Substantial numbers of Americans say they have difficulty affording some of life’s necessities. Six-in-ten say it is difficult for them and their families to afford gasoline, and smaller majorities say the same about saving for retirement (56%) and paying their taxes (51%). Substantial minorities also say they have difficulty affording health care (45%), utility bills (44%), and health insurance (44%). More than a quarter (27%) say they have trouble affording food.
Affording life’s necessities is especially difficult for those in lower income groups. Nearly two-thirds (65%) of Americans with household incomes under $20,000 say it is diffciult for them and their families to afford home heating and electric bills, and fully half have trouble affording food.
Overall, more Americans now say that it is not difficult for them to afford any of the six items that were asked about in both 1992 and 2008 (16% in 1992 vs. 23% in the current poll), but this positive shift has only happened among those in the top income groups. About four-in-ten (41%) of those with household incomes $100,000 or more say they do not have trouble affording any of the six items; in January 1992, only about a quarter (27%) in the highest income group said the same. A similar pattern is evident among the upper middle income group. (For a detailed description of income groups see pg. 19.)
Looking as specific items, however, the results are more mixed. The public’s ability to afford food and health care has not changed singificantly since 1992. But more now say it is easy for them to afford taxes and health insurance and to save for retirement than did so in 1992. At the same time, a greater number now say they have difficulty affording their home heating and electric bills than in 1992 (44% now, 38% then).
Those in the middle income groups have seen the largest change in their ability to afford their heating and elecric bills; 56% in the $20,000-$50,000 category and 38% in the $50,000-$100,000 group find it difficult, compared with 43% and 27%, respectively, in 1992.
It has become considerably easier for those in higher income groups to afford both taxes and saving for retirement. Fewer than four-in-ten in the top income catgory say they have difficulty affording saving for retirement (38%) or paying taxes (37%). In 1992, 51% in the highest income category said they had difficulty saving for retirement, while 49% said they had trouble affording taxes.
Affording the Good Life
Most Americans (52%) say it is easy for them to afford the things they want in life, while 45% say it is difficult. In 2001, 50% said it was easy for them to afford the things in life they wanted while in 1992 far fewer expressed this view (39%).
People in all income groups feel more comfortable with what they can afford today than they did in 1992, but only those in the lowest income category say it is easier for them to afford things than did so in 2001 (28% vs. 19%). Still, seven-in-ten Americans with household incomes under $20,000 find it difficult to afford the things they want in life, as do most of those with household incomes between $20,000 and $50,000 (57%).
Wealthy Less Satisfied With Housing, Cars
Overall, Americans continue to express satisfaction with the housing they are able to afford, as well as with their cars and the amount of money they have for going out. But most are dissatisfied with the amount of money they have for vacations and the amount they are able to save and invest. In general, these views have not changed much since 2001 or 1992.
However, the proportion of wealthy Americans who say they are very satisfied with their housing and cars, in particular, has declined considerably since 2001. About a quarter of those with household incomes greater than $100,000 (27%) say they are very satisfied with the housing they are able to afford; in 2001, 42% of the highest-income Americans said they were very satisfied with their housing. And while nearly a third (32%) in high income households were very satisfied with the cars they could afford in 2001, fewer than one-in-five (19%) say that is the case today. There has been less change in these opinions among those in lower income groups.
Nonetheless, there continue to be striking disparities between affluent Americans, and those less well-off, in their satisfaction with cars, vacations and other things. For example, those with household incomes greater than $100,000 annually are the only income group in which majorities express satisfaction with their vacations (73%) or their ability to save and invest (58%).
The income gap in satisfaction is somewhat smaller when it comes to housing. Solid majorities in every income category — including 64% of those with household incomes of less than $20,000 a year — say they are satisfied with the housing they are able to afford.
Taking On Debt
While an increasing proportion of Americans say that their family income is falling behind the cost of living, the share that says they owe more than they can afford on credit cards and other non-mortgage related debts is virtually unchanged since September 2007 (22% in the current poll vs. 20%).
Among the self-identified working class, about a quarter (23%) now say they owe more than they can afford, compared with 20% last September, and those who describe their households as professional or business class are slightly less likely to say they are in debt (11% vs. 14%). But consumer debt affects more in struggling households than it did in September 2007. More than four-in-ten Americans (43%) who describe their households as struggling say they owe more than they can afford, a five-point increase since September.
Views of the Job Market
Overall, a majority (53%) says that jobs are difficult to find in their community while only about a third (34%) says there are plenty of jobs available. The percentage saying that jobs are difficult to find locally has increased modestly since February 2007 (48%). In October 2003, 66% said that jobs were difficult to find, the highest percentage expressing that view since the start of the Bush administration.
People’s assessment of the job situation in their community varies widely by income and employment status. Majorities in every income category, except for those with household incomes greater than $100,000 annually, say that jobs are difficult to find.
Most people who are not employed (59%), or are employed part-time (57%), say jobs are difficult to find. Among those working full-time, about half (48%) say jobs are hard to find. In addition, 72% of those who have been out of work or had someone in their household out of work in the past year say that jobs are difficult to find, compared with 46% of those who have not been out of work.
Notably, people are much more upbeat about job prospects in their particular line of work than they are about the overall jobs situation in their community. About half (48%) say there are plenty of jobs available locally in their line of work; 46% say such jobs are difficult to find.
About a quarter of Americans (28%) say there has been a time in the past year when they or someone in their household have been without a job and looked for work. This includes roughly half of those in the lowest income category (48%). More part-time workers than full-time workers say they have been jobless in the past year. In addition, a third of those in the South (33%) say they have been without a job, more than in other regions.
For the most part, people who are employed say that the company or organization they work for is in good shape: 69% say their company is in excellent or good shape, while 27% rate their employer’s financial condition as only fair or poor. People’s perceptions of the financial health of their employers are not significantly different than it was in June 2001 (70% good/excellent).
More Bearish on Stocks
Americans are far less optimistic about the stock market than they were even a few months ago. More than half (53%) say this is a bad or very bad time to invest in the stock market, up from 42% in September. Only 31% say it is a good or very good time to invest, down from 40% in September. In January 2006, a plurality of Americans (46%) said it was a good time to invest in the market.
People who currently have money in the stock market — including active traders and passive investors (52% of the public) — have a more positive view of the stock market than do those who have no money in the stock market (46% of the public). Nearly half of investors (46%) say it is a good time to invest, compared with just 14% of non-investors. But the opinions of both groups have turned more negative since last September: at that time, 53% of stock-market investors thought it was a good time to invest, as did 24% of non-investors.
More people with less education and lower incomes say that it is a bad time to invest in the stock market; higher proportions of these groups also did not offer an opinion. In addition, more men than women say it is a good time to invest (35% versus 26%).
When asked what economic problem worries them most, stock investors are more likely than non-investors to cite volatility in the stock market (11% vs. 3%). However, far more investors cite gasoline prices (32%) or rising health care costs (29%) as their biggest worries. These are the top-two concerns among non-investors as well.
To create comparable income categories for 1992, 2001, and 2008, figures were adjusted to account for changes in income distributions. “Low income” households are defined as those in roughly the lowest 20% of the income range, which corresponds to those earning less than $15,000 in 1992 and less than $20,000 in 2001 and 2008. “High income” households are defined as those roughly in the highest 20% of the income range, which corresponds to those earning $50,000 or more in 1992, $75,000 or more in 2001, and $100,000 or more in 2008. Middle and upper middle income categories are also adjusted accordingly, with each year’s median household income (in unadjusted dollars) to divide the two middle categories.