Released: October 15, 2008
Public Not Desperate About Economy or Personal Finances
Obama Clearer than McCain in Addressing Crisis
Section 1: The National Economy and Personal Finances
The economy dominates the list of the most important problems facing the country; three-quarters of the public now cites an economic concern as the most important national problem. This is the highest percentage mentioning an economic problem as the biggest issue confronting the nation since January 1992 (76%).
While the overall economy is a greater concern than it was in July, the economic issues mentioned are far different. Currently, 26% point to an aspect of the financial crisis – including the banking situation, drops in the stock market and retirement accounts, and home foreclosures – as the most important problem facing the nation; the crisis only emerged in recent weeks and was not cited in polls earlier this year. Far fewer people cite energy or gas prices than in July. Just 5% now say energy or gas prices are the biggest national problem, down from 19% in July.
Since the beginning of the year, there has been a sharp decline in the percentage citing the war in Iraq as the most important national problem; 11% volunteer the war, compared with 17% in July and 27% in January. And health care, which was mentioned by 10% of respondents in January, dropped to 3% in July and 4% in the current poll.
Personal and National Economic Ratings
Americans continue to offer starkly negative views of national economic conditions. Nine-in-ten say the economy is in only fair (32%) or poor (58%) shape, largely unchanged from earlier in the year and near historic lows for the question’s 16-year trend.
People give far more positive ratings to their own financial situation than to national economic conditions. Just more than four-in-ten (41%) rate their personal financial situation as excellent or good, compared with just 9% who say that about the nation’s economy. Currently, about as many people rate their personal finances positively as did so in July (42% excellent/good).
Historically, personal financial ratings have been more stable than ratings of the national economy. During the economic boom years of the late 1990s, the share rating the nation’s economy positively soared, but personal financial ratings remained largely unaffected. Today, with national economic ratings near historic lows, personal financial ratings have been more resilient.
It is worth noting, however, that the erosion in personal financial ratings over the course of the year has been notable. In January, an equal number of Americans rated their personal finances positively as negatively (49% excellent/good, 49% only fair/poor). The percentage rating their finances positively fell to 42% in July and remains low currently (41%).
Personal financial ratings vary widely across demographic and political subgroups. Most of those in households earning $50,000 or more offer a positive assessment of their financial situations, while most in lower income households offer a negative one. Race also is a factor, with African Americans substantially less satisfied than whites with their finances.
By comparison, there is far less variation in ratings of the national economy. Overall, 58% say it is in poor shape, and while this is somewhat higher among lower- income and African American respondents, the gaps are far smaller than on personal financial ratings.
However, there are substantial political differences in ratings of both personal finances and the nation’s economy. Large majorities of both Democrats (64%) and independents (61%) rate their personal finances as only fair or poor; comparable percentages rate the national economy as “poor” (68% of Democrats and 62% of independents). By contrast, most Republicans offer a positive personal financial assessment, and while few say the nation’s economy is in “good” shape, only 44% offer a rating of “poor.”
A majority of Americans say that the country is currently in a recession (54%); an additional 22% says the country is in a depression. Among those with annual family incomes of less than $30,000, about three-in-ten (31%) think the country is in a depression and another 42% describe current conditions as a recession. The view that the country is in a recession, and not a depression, prevails among higher income groups. Roughly six-in-ten (62%) respondents with household incomes of $75,000 or more say the country is in a recession, while just 15% see it as a depression.
Majorities of Republicans (54%), Democrats (56%) and independents (56%) agree that the country is in a recession, but Democrats are more than twice as likely as Republicans to say the country is in a depression (28% vs. 12%); 23% of independents say the country is in a depression.
Americans Remain Optimistic
While, on balance, most Americans offer a negative assessment of their personal financial situation today, most remain optimistic about their future finances. About six-in-ten (59%) expect their financial situation to improve over the next year, while just 26% expect it to get worse (15% volunteer that it will not change or are uncertain.) The percentage expressing personal financial optimism has rebounded from a low point over the summer; in July, 51% said they expected their financial situation to improve over the next year – the lowest proportion in 16 years of surveys.
Personal financial optimism has recovered among several demographic groups. More than four-in-ten (43%) of those ages 65 or older expect their personal finances to improve over the next year, compared with 29% in July. Optimism also has increased among those 30 to 49 (65% now vs. 55% in July). Young people, who offer somewhat more negative ratings of their current finances than do older Americans, continue to be optimistic that their situation will improve over the next year; nearly three-quarters of those younger than 30 expect that to be the case (74%).
Comparable percentages of Republicans (at 65%) and Democrats (at 62%) say they expect their financial situation to improve over the next year; fewer expressed optimism in July (56% of Republicans, 50% of Democrats). A more modest majority of independents (55%) express optimism about their future finances, virtually unchanged from July (52%).
The public’s outlook for
the national economy over the coming year also is broadly optimistic. Currently, 46% say they expect that economic conditions in the country a year from now will be better than they are at present – just 16% think they will be worse. In July, 30% predicted the economy would get better and 21% worse.
Americans Cut Back on Luxuries and Necessities
Americans are increasingly optimistic that the economy, and their own finances, will improve over the course of the next year. But in the short-term, many are delaying or cancelling spending on big-ticket, and smaller-ticket, items.
Most (59%) say that as a result of what has been happening with the economy lately, they have cut back on vacation spending. Three weeks ago, 48% reported doing so. Cutting back on dining out also is a common reaction to the current economic situation, with 55% eating out less often.
The public’s belt tightening extends to other major purchases as well. Nearly four-in-ten say they have delayed or canceled plans to buy a new home or make major home improvements because of the recent economic downturn (38%) and a nearly identical percentage say they have delayed or canceled plans to buy a major home appliance such as a computer (39%). Some 36% now say they have delayed or cancelled plans to buy a new car, up 13 points over the past few weeks alone.
In addition to reduced spending, about half of the public (48%) has changed the way their money is saved or invested because of what’s been happening with the economy lately. However, most do not see the current economic crunch as affecting their retirement as of yet: Just more than a quarter (26%) say they have adjusted their plans for retirement, up only three points from Sept. 19-22.
Confidence in Banks
In the midst of the current financial crisis, just 36% of Americans say they are very confident that money they have in banks is safe; an additional 38% say they are somewhat confident that their bank savings are safe. About one-in-five (21%) say they are not too or not at all confident that their bank deposits are safe.
Nearly half of college graduates (48%) say they are very confident in the security of their bank deposits compared with just 26% of those with a high school education or less. Those with relatively high annual incomes also express greater confidence in the safety of their deposits.
Republicans (47%) are much more likely than either independents (35%) or Democrats (29%) to express a great deal of confidence in the security of their bank savings. About as many Democrats say they are very confident in the safety of their deposits as say they are not too or not at all confident in the safety of those deposits (29% vs. 25%).
Jobs Getting Scarce
The proportion of Americans who say jobs are difficult to find where they live has risen sharply from about a year ago, and is at its highest level since October 2003. In November 2007, fewer than half of Americans (48%) said it was tough to find work where the lived; that has grown to 64% in the current survey.
The sense that jobs have become scarce is shared across income groups and education levels. Last year, about a third (34%) of those in households with family incomes of $100,000 or more said that jobs were difficult to find. Currently, a majority of those in this income category (54%) say that jobs are difficult to find. Substantial majorities of people at all education levels say jobs are difficult to find, but that reflects a more dramatic increase among college graduates (22 points) than among those with less education.
The perception that jobs are difficult to find has increased among people across the political spectrum. However, Democrats (70%) and independents (67%) are more likely than are Republicans (53%) to say that jobs are scarce.
Most working Americans say their employer is in excellent or good financial shape, but the proportion saying excellent has dropped eight points since early February (30% to 22%). Three-in-ten employed people say their company is in fair or poor shape, which has changed little since early February.
Most Americans (57%) now say that their household income is falling behind the cost of living. That is down from a high of 64% in July, but notably higher than September 2007, when just 44% said they were falling behind financially.
The sense that prices are outpacing incomes has eased somewhat since July across all income groups. However, two-thirds of those with household incomes of less than $50,000 say they are not keeping up with the cost of living. More than half (57%) of those in households with incomes of $50,000 to less than $75,000 agree, as do 37% of those with incomes of $100,000 or more.
More than six-in-ten of those 30 and older now say their incomes are falling behind the cost of living, a view shared by 42% of those younger than 30. Concern about inflation has declined somewhat since July among Americans younger than 50, though they remain more worried than they were a year ago. Among Americans ages 50 and older, there has been no decline since July in concern about rising prices.
While inflation concerns remain high, nearly half of Americans (49%) say it is easy to afford the things they want in life; about the same percentage says it is difficult (48%). This opinion has changed little since February (52% easy to afford). In January 1992, fewer Americans (39%) said it was easy to afford the things they want in life.