Pew Research Center for the People & the Press
Economic Discontent Deepens As Inflation Concerns Rise
Growing Rich-Poor Divide in Affording Necessities
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 concern 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)
Recession Fears
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).
Anxious Homeowners
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).