If you think back to about two years ago, as the economy was worsening but before anyone realized how bad things were going to get, there was a great deal of debate about whether or not the economy had slipped into a recession. President Bush, at the time, was careful not to use the R-word when asked about the economy and it wasn’t until the recession was official that people really started taking the economic problems seriously.
At the time, Warren Buffett said in an interview that, “from a common sense standpoint right now, we’re in a recession.” He was right. Americans didn’t need to see that there were officially two consecutive quarters of negative GDP growth to see the problems–the recession was all around them. Today, we are officially emerging from a recession, as GDP growth in the third quarter was positive. However, not many people are celebrating just yet. Here are some of the realities that people are talking about when it comes to the economy based on a recent survey.
“We Are Still In a Recession”: According to the survey, 84% of Americans agreed with this statement. The same survey three months ago yielded a result of 87% who agreed with the statement, so a very small percentage of Americans feel that things got substantially better over the past few months. A survey of top economists in October resulted in 81% believing that the recession was over. Again, it depends on which definition of recession you subscribe to.
“There Is Still No Good News”: With all of the bad news that Americans have grown accustomed to hearing over the past two years, people are hungry for good news. As the economy has improved, there has been a lot of news that most would consider “not as bad” as a year ago, but there has been very little in the news to get excited about. One in ten Americans is still out of work, millions of homeowners are still fighting to avoid foreclosure, and investment portfolios still have a long way to go before people feel good opening their statements again.
“We Could Still See a Depression”: In spite of the more pleasant economic news recently, an astounding 39% of those responding to the survey stated that they feel conditions are getting worse instead of getting better. This was a greater percentage of pessimists than three months earlier. When asked about a depression, described as a period of time with 25% unemployment, rampant bank failures, and millions of homeless Americans unable to feed their families, 43% responded that the scenario was either somewhat or very likely. A year ago, 50% believed that the scenario was a realistic possibility. It’s not a likely scenario economically, but it’s an accurate window into the minds of people looking at the economy from a common sense perspective rather than just looking at the numbers.
