Economic stresses and fears sap American optimism

Source: Scripps Howard News Service
Date: April 08, 2009

If losing jobs and seeing their stock portfolios decline isn't enough, Americans also have been stripped of one of their most important resources -- optimism.

Nearly three-quarters of American adults believe future generations will face a harder time economically than current and past generations, according to a survey of 943 people by Scripps Howard News Service and Ohio University.

About a quarter said they think it will take more than three years for the economy to start growing again, and another quarter say they are frequently or sometimes worried about unemployment.

According to Lynn Franco of the Conference Board, a nonprofit business research group that issues the monthly Consumer Confidence Index, expectations of the economy are at historic lows.

"I think pessimism about the future could have a lot to do with what people are seeing in the news, and the money being spent by the government," Franco said. "People see the debt burden in the future as being much heavier and they're thinking more about things like what they would do without health care."

Based on the Conference Board's surveys, Franco estimates people won't start looking on the bright side again until 2010.

Mary Gresham, an Atlanta psychologist who focuses on money issues, says about a quarter of her patients have been hit hard by the economy. However, it's not just those with money problems who are fretting.

"Even people who are in a house they can afford are showing signs of anxiety," Gresham said. "I have some patients who are so anxious, and they don't have a reason to be."

This could be due to the "herd mentality."

"When people talk to each other about things like money, it goes one of two ways," Gresham said. "When times are good, you talk about spending money and things you buy. When times are bad, everyone is talking about their problems and what they're doing to save."

The Scripps survey found that the recession is hurting people in lower income brackets more than those with higher incomes.

Close to 70 percent of those earning $10,000 or less annually reported that their household income had decreased over the last five years while only 11 percent making $80,000 to 100,000 reported a decrease. And 65 percent in the higher brackets said household income had actually increased.

Kevin Leicht, a sociology professor at the University of Iowa who researches economy and society and disparity issues, said that gap is nothing new.

"When the economy took a dive in 2001, it didn't take the upper and upper-middle classes long to recover," Leicht said. "The lower and middle classes never did fully recover."

The survey found that 48 percent of adults said someone in their household has experienced a lay off at least once, and most in that group said layoffs have hit home during the last 12 months. Those in lower income brackets were more likely to be affected than the wealthy.

"People in the upper and upper-middle classes have lost money on paper, in stocks and on the value of their house, for example," Leicht said. "But that's not necessarily the money they live off."

The lower and middle classes tend to live paycheck to paycheck and have little savings or investments.

"When people in the lower classes start losing income, they feel the pain much more quickly," Leicht said. "They can't pay their bills, buy groceries or take their kids to the doctor."

Leicht said he detects some hints of optimism in the poll's findings of future prospects.

"The way I see it, people, especially older people, are scared for future generations because they think it will be harder for them to find a job in this economy if they've never had one," he said.

He thinks those people are confident they will have an easier time finding a job since they've always had one.

"But I think they are being overly optimistic about their own situation," Leicht said. "It's not as easy for people in their 50s to find jobs right now either."

The survey has a margin of error of about 4 percentage points.

The survey was conducted by telephone from Feb. 16 through March 11 at the Scripps Survey Research Center at Ohio University under a grant from the Scripps Howard Foundation.