Now, for the flipside of The ‘Worrisomely Unworried’ Crowd.
Floyd Norris points out that the Conference Board’s economic survey, which dates back 4 decades, shows a curious change in future expectations. Since 1967, Americans have for the most part, remained more optimistic than pessimistic about their own futures. This was true even when their expectations for the overall economy were negative.
But that optimism disappeared during the 2007-9 downturn. A majority of folks began to expect their own financial situation would get worse — versus those expecting better personal times ahead:
“In April, the Conference Board reported this week, about one person in 10 expected his or her family’s income to improve, while about one in six expected family income to go down.
As can be seen from the chart (below), good times in recent years have produced less net optimism than in previous cycles, while bad times have brought more pessimism.
On its face, such a result would seem to indicate Americans are losing their optimism, but it may not be as simple as that. In this cycle, unlike earlier ones, many workers were forced to take pay cuts, at least on a temporary basis. So it became reasonable to expect lower income, even for some who did not expect to lose their jobs.
Still, the decline in expectations regarding their own incomes is another indication of how much this recession scared people — and that some of the fright remains.”
I suspect that the length of the recession, unusually long compared to recent contraction, might be partly to blame for this. So too does the permanent loss of certain types of employment, and the underemployment lower wages of large percentages of US workers (think U6 data as a basis for this).
Regardless, whether the shift is temporary, or more long-lasting, it is noteworthy.
Question: In six months, does the respondent expect his or her own family’s income to be higher, lower or about the same?
click for larger chart
Courtesy of NYT
There is a trader’s caveat to this: General surveys have less resonance for market watchers than a bullish/bearish survey does. YMMV.
As Recession Ebbs, Many Still See Gloom
NYT, April 30, 2010