Despite an ongoing surge in stock and housing prices and steadily declining unemployment, most
Americans still have little confidence that the economy is picking up.
By some measures, the economy is clearly on the mend. Employers added a healthy 203,000 jobs in November, while the unemployment rate has dropped to 7 percent, from 7.9 percent in January. Other recent economic data also show increases in manufacturing, restaurant
spending and construction. Meanwhile, the Federal Reserve earlier this week announced that Americans had regained all
the wealth they had lost during the Great Recession.
Despite these signs of an upturn, a
CBS News/New York Times Poll on Tuesday found that 69 percent of Americans say the economy is in bad condition, with 66 percent expecting it to either stay
the same or to get worse. This echoes the results of the most recent results from
The Conference Board’s consumer confidence index, which dropped again in
November following an even sharper drop the previous month.
Why are consumers so downhearted? For one thing, many of the economic indicators pointing to a rebound don't actually apply to them.
Consider the Fed report saying Americans have regained all
the wealth they lost because of the financial crisis. The study found that total
household net worth — defined as assets minus liabilities — expanded 2.6 percent, or $1.3 billion, from July through September. Although that sounds impressive, that wealth hasn't necessarily been recovered by the same people who lost it during the housing bust.
Most of this increasing wealth is because of the stock
market, which has soared to record highs in recent months and rewarded investors with double-digit returns. Yet with the top 10 percent of income-earners owning 80 percent of stocks, most of that recovered wealth has gone to high-income households.
Similarly, rising home prices don't benefit most Americans because fewer people own houses than prior to the mortgage meltdown.
The U.S. Labor Department's latest jobs report is also problematic. Although stronger job-creation is clearly a good sign, the drop in the unemployment rate is still largely because so many people have dropped out of the workforce.
As James Pethokoukis of the American Enterprise Institute wrote, “There are still 1.1 million fewer employed Americans today than right before the recession started, despite a potential labor force that’s 14 million larger. And there are 3.6 million fewer full-time workers than back in 2007.”
In addition, many of the jobs that have been created during the recovery
have been in retail, restaurant and other lower-paying sectors. Wage gains, too, remain modest at best. According
to the Society
for Human Resource Management, average pay increases for 2014 will
remain at 3 percent for the second year in a row, roughly one
percentage point below pre-recession levels.
“However, more employees are likely to receive
less than 3 percent than receive more than 3 percent due to greater pay differentiation
based on performance,” the group added.
One factor seems to affect how people see the economy -- how much money they make. The CBS/New York Times poll showed that almost 40 percent of those making at least $100,000 per year said the economy is doing better,
while only 25 percent of those making less than that feel the same way.