July 25, 2013

5 reasons Americans have the economic blahs

econSummary_310-employFour years into the current recovery, the views of most Americans about the economy can be summed up as “meh.” According to a Pew Research Center survey conducted last week, 45% of Americans rate the national economy as “only fair,” and 37% call its condition “poor”; only 17% were willing to say the economy is in “excellent” or “good” shape. And a plurality, 44%, say it will be a long time before the economy recovers.

Those tepid-to-glum attitudes have persisted despite some encouraging trends at the macro level: Unemployment is down, stocks are up, inflation is tame, and GDP growth is, if not all that impressive, at least running ahead of most other industrialized countries. But at the level where most people actually live their lives, what improvement there’s been hasn’t erased the Great Recession’s sting.

As President Obama tries to refocus both the government and the public on economic concerns, we decided to take a look at the “real-world” economy through five lesser-known, but arguably more revealing, indicators:

Unlike the unemployment rate, which can be affected by how many jobless people actively look for work, the employment-to-population ratio (sometimes called the employment rate) looks at employed adults as a share of the total civilian noninstitutional population; examining just 25- to 54-year-olds takes out most students and retirees. Despite some recent improvement, the June employment rate of 75.9% is still well below pre-recession levels, which typically were close to or above 80%. And the flatness in the rate indicates the economy isn’t doing much more than adding enough jobs to keep up with population growth.

econSummary_310-homeowner Home ownership was on the rise well before the mortgage mania of the mid-2000s, aided by falling interest rates and government policies designed to encourage it. But the bursting of the bubble and the wrenching recession that followed forced tens, if not hundreds, of thousands of families to lose their homes; home ownership now is down to levels not seen since the mid-1990s.  The bust’s impact was particularly severe on non-whites: While home ownership among non-Hispanic whites is 2.8 percentage points below its peak, home ownership among blacks is down 6.6 percentage points to 43.1%, and down 6 percentage points among people of all other races, to 54.6%. Among Hispanics, home ownership has fallen to 45.3% in the first quarter of this year from 50.1% in the third quarter of 2007.

econSummary_310-retire Although early withdrawals from retirement accounts increased during the Great Recession and its aftermath, the difference was less than what one might have expected — largely, researchers from the Federal Reserve and the IRS found, because early withdrawals were so substantial in the years leading up to the recession. The data suggest that many families were under financial stress even during the apparently prosperous years of the mid-2000s.

econSummary_310-bankruptcies

 

When financial stress becomes too much to bear, bankruptcy becomes an option. Individual (non-business) bankruptcy filings surged during the Great Recession — largely due to sharp increases in Chapter 7 (liquidation) filings. Though individual bankruptcy filings have fallen since 2010, they remain well above pre-recession levels.

econSummary_310-debtOne bright spot: Household debt is taking up less of people’s disposable income, as mortgage balances and credit-card balances continue to fall. Student-loan balances, though, are on the rise — up $20 billion in the first quarter of 2013, to a total of $986 billion. Since the second quarter of 2010, student loans have constituted the second-biggest category of household debt, after mortgage debt.

Of course, no five indicators — or 25, or even 55 — can paint a complete picture of something as complex as the U.S. economy. But looking at different parts of the picture can help explain why so many Americans feel the economy isn’t working for them.

Category: 5 Facts

Topics: Economic Recession, Economics and Personal Finances, National Economy

  1. Photo of Drew DeSilver

    is a Senior Writer at the Pew Research Center.

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4 Comments

  1. R.Sol1 year ago

    U-6 unemployment figures are closer to 14% and should be a guide to these findings. What is there to get enthused about? Anyone buy groceries lately?

    Reply
  2. Jan1 year ago

    Obama walks in the door and acts like he has NO IDEA what is going on with His Own Economy!!

    The Leader who Leads Nothing and wonders why things are so BAD.

    Reply
  3. Debbie1 year ago

    I think the problem is taxes have gone up, rent has sky-rocketed, gas & electric is up, phone, cable, internet, and food are also high. I think people could get it together if companies would just stop raising their prices.

    Reply
  4. James Early1 year ago

    In a faith based economy, the overseeing bodies have sided with the crooks numerous times in too short a timeframe to just push it aside and consider it a mistake. The ability for the system to self-regulate has been eroded to the extent that the people have lost faith in the market to perform ‘fairly’ in invester’s interest and with their security in mind. So, since the market was manipulated into a free-falll … and before that, numerous financial firms had robbed the funds they were supposed to be growing for investers (while handsomely benefiting for themselves) and before that.. and before that Enron… and before that… do you get my point yet. We the disbelievers, “fool me once, shame on me. Fool me again, … well you just won’t fool me again” … oh wait… that was just another pawn in place, maybe to help manipulate the market. hmm…

    Reply