March 17, 2014

Resurgent public optimism on the economy? Don’t hold your breath

One of the biggest political puzzles of 2014 is why the public remains so bearish about the economy, and in turn critical of Barack Obama’s stewardship of it, given clear signs that economic indicators are improving. As the new year began, the Associated Press summed up the optimistic outlook of experts succinctly: “Consumers will spend more. Government will cut less. Business will invest more. And more companies will hire.” In that regard, the Bureau of Labor Statistics first report of the year showed that the unemployment rate fell to a five-year low of  6.7 percent, and essentially remained at that level in February.

But even so, much of the American public is still not over the Great Recession. And the factors that drive economic pessimism are not easily mitigated.  Surveys show that a complex combination of partisanship and widening socio-economic gaps are in play, undermining chances of an improvement in the public mood any time soon. 

At the outset of what appeared to be a brightening economic climate, the Pew Research Center’s January national survey found just 16% of the public rating the national economy as excellent or good while a whopping 83% rated it as only fair or poor. This is little different than a year earlier when the survey found 12% giving the economy a positive rating and 86% rating it negatively. In fact, this is only modestly better than at any point since the onset of the Great Recession.

The same pattern is seen in how Americans size up their personal finances. While Americans have a better opinion of their own finances than of the national economy, ratings of personal financial well-being remain well below what they were pre-recession. In 2007, and for much of the decade before it, about half of Americans rated their finances as excellent or good. Today, just 39% do.

Pew Research Center’s on-going polls on the public’s reaction to news coverage of the economy in recent years underscore the depth of pessimism about the national economic outlook. The polling has consistently found Americans saying that the economic news they follow is at best mixed.

In early February, the Pew Research Center noted that despite declining unemployment rates, and an improved stock market, the public’s perceptions of recent economic news had shown little change. While fewer these days say news reports are mostly bad, six-in-ten continue to say the news they hear about the economy is a mix of good and bad. And, the percentage saying it is mostly bad (33%) dwarfs the numbers saying it is mostly good (5%). In February, with the unemployment rate declining to 6.7% after being at 7% or higher through nearly all of 2013, most assessed news about jobs as mostly bad (42%) or mixed (44%).

Politics is another factor in the public’s continued negative economic outlook. The Pew Research Center discovered nearly a decade ago that how Americans judged the economy had in part become a function of their partisanship.

In the 1990s, Republicans, Democrats and Independents for the most part all saw the economy pretty much the same way – good, bad or mixed.  But since then, Republicans and Democrats have seen  different economic realities depending on who was president. Through George W. Bush’s two terms, Democrats were much less likely than others to say the economy was in excellent or good shape. Then, with Obama’s election, the reverse became true. Republicans became less positive and more pessimistic than Democrats.

While the partisan differences in bottom line opinion about the state of the national economy are modest compared with differences in the Bush years, they permeate economic attitudes, more generally.  For example, in Pew Research’s February poll, fully 47% of Republicans but only 17% of Democrats said they were hearing mostly bad economic news.

Americans' views of the economy based on educational statusBut, unlike views of the national economy, partisanship has less to do with judgments of one’s personal finances. Rather, socioeconomic factors are dominant. For example, college grads now size up their finances roughly as well as they did before the Great Recession took a toll on their outlook. In contrast, personal financial assessments of the less well-educated Americans have not improved as the economy has recovered after the Great Recession.  And economic satisfaction has declined proportionately more since 2007 among those earning less than $100,000 per family than among those with family incomes of $100,000 or more.

America's shrinking middle classIn a similar vein, the Pew Research Center recently reported that the share of Americans who identify with the middle class has fallen sharply in recent years, dropping to 44% in the latest survey from 53% in 2008 during the first months of the Great Recession.

In part, the post-recession widening of socioeconomic gaps might be explained by the fact that while the unemployment rate has dipped, the number of Americans out of the work force remains high. But even here, economists speculate that, to some extent, the high rate of Americans that are out of the workforce may be in part a measure of increasing numbers of Baby Boomer retirements.

The data suggest that economic attitudes may be more complex indicators than they once were. The public’s view of the national economy is now filtered through the lens of partisanship, and moderated by a continuing perception that the economic news is mixed at best, even as some economic indicators have improved. At the personal level, one’s economic outlook is shaped more by socioeconomic class today than in recent years.

Read trends in economic attitudes with care, because they are no longer simply a measure of how well most Americans judge the nation’s condition or their own. They now also reflect increased polarization and growing financial divides in the U.S. It may be some time before the public sees the national economy in a positive light. And the personal financial outlook of middle- and lower-income people may well remain gridlocked into the future.

Topics: National Economy

  1. Photo of Andrew Kohut

    is Founding Director of the Pew Research Center.

Leave a Comment

Or

All comments must follow the Pew Research comment policy and will be moderated before posting.

9 Comments

  1. jeff loggens1 month ago

    Its still much more difficult to find a well paying job than in early 2007. Whats to guess at? If anything this article comes as a surprise because it attempts to say anything good about the current economy. Still arent any quality jobs to get, population has grown against the recovery the entire time. Number of populace in the workforce is a good 5% under the norm (participation). Nope, still awful. Better economy for who? The guys who move aluminum on trucks in the night to drive up the price? Goverment is still amongst the most corrupt in the world, havent done anything about gerrymandering, corporate controlled tea party has done everything to stifle the proposed recovery. The unemployment number is much higher because those new jobs are part time, much worse wages, lesser quality corporate jobs. Over regulation has stifled small business. Ypure actually saying tue economys getting better? The only one who believes that is an obama stooge in an election year, and i vote democrat,

    Reply
  2. yewpew2 months ago

    when the World is running down, you make the best of what’s still around……

    It’s really terrible. Bad.

    Reply
  3. Barbara Batchelor-Abernathy3 months ago

    If one was to look at the White House in general and see the amount of money being poured into it, it could effect the way most of us who are paying them feel. The first lady has 49 paid asst., when no other first lady had more than 2 unpaid ones. That money could be better spent elsewhere in the system. The extravagant vacations taken by family and friends in the past, that we have still not been reimbursed for, which we should be, has not been done. Those of us making less than 100,000 dollars a year make for a lot of people. We do not like our money being wasted this way by this admin. They should be the first to show the country that they are cutting the fat from the public bill. After all they are still public servants elected by the people, and paid by the people.

    Reply
  4. Margaret4 months ago

    I see no real improvement in the economy. They say that the unemployment rate has declined but a lot of the jobs that are available are low wage retail jobs which cannot really even sustain most peoples’ lifestyle. Also, technology has eliminated a lot of what used to be very viable office and clerical positions. The only ones who are not feeling the pinch of all this are the highest economic group who are or have been in that group for time immemorable, thus the top one or two percent.

    Reply
  5. John Ashcraft5 months ago

    The facts that wages have stagnated/fallen and new jobs pay less than those lost in the Great Recession seem critical to understanding peoples’ attitudes. The partisanship of news outlets also has a big impact. Considering these things and other issues raised in the article, perceptions are right where I’d expect them.

    Reply
  6. Christopher Mixson5 months ago

    Spending vs saving is a mixed bag; spending is good for the economy near term, but many of those same persons who are spending are often the very ones who should be saving, as evidenced by dismal reports of preparedness for retirement, etc. Statistically, I see scores of people who did little in terms of planning, are now nearing traditional retirement age and who are, because of impotent financial planning, all too willing to trade their votes for entitlement guarantees…because they spent recklessly and speculatively along their way. This will only drive the country deeper into debt and create a greater partisan divide (personal responsibility seems easily forfeit in this age of finger pointing). Those who are not prepared, approaching 50% of baby boomers, will be forced to work longer further depriving the younger generation of jobs, etc. and many of them will essentially end up on the public dole. None of this bodes well for a rosy economic outlook.

    Reply
    1. Barbara Batchelor-Abernathy3 months ago

      first off, you and I pay for social security, and medicare. So essentially your money and mine is going toward retirement as President Roosevelt intended. What was not foreseen and continues to happen is that both the houses, continue to use the general fund as their personal purse to pay for any and everything. Which is where social security and medicare money goes. There are enough I.O.U.’s from the goverment that they should start putting some of that money back in. Did you really think the money taken from your paycheck went into some kind of special account. Roosevelt never foresaw the misuse of this money, he thought that the elected officials would continue to do the right thing and make it grow. Sadly he was mistaken.

      Reply
  7. Sam Harris5 months ago

    How do you factor in pure hatred of Obama? Because there are a certain group of voters who will NEVER approve of anything this President does. Case in point.

    The Affordable Care Act routinely polls HIGHER than Obamacare. By a good 10%. These people will NEVER approve of anything Obama does.

    Reply
    1. yewpew2 months ago

      Are you making a joke? ‘Obamacare’ is the ACA.

      (Ok….I get it.)

      It’s hard for me to be objective because I do not hate Obama, I simply dislike the fact Americans who are not wealthy or well connected are ignored & marginalized by both Pol Parties & most Politicians. We’re grist for the mill.

      I guess Obama did the best he could w/ACA…..however, I have nagging doubts. There’s no real change or improvement. It’s simply a Profit windfall for the Health Insurers who are smart & know they need to play the game according to the new rules in order to get the Profits.

      You do realize all Americans must PURCHASE Health Insurance now, right? (ACA is not ‘Medicare For All’)……So lower income working class Americans will now be required to PURCHASE Health Insurance……..Health Insurers can sell more policies…..more profits for Health Insurers.

      Obama is a ‘moderate Repub’. DC is a charade, and panders to Wall Street. (I wish I were wrong….)

      Reply