GALLUP NEWS SERVICE
PRINCETON, NJ -- It is now clear that the economy plunged in September. Most economic observers are predicting that the economy will continue to weaken in the last quarter of this year, leaving us with two consecutive quarters of negative economic growth -- thus meeting the technical definition of a recession. While many forecasters have attributed this drop to a post-Sept. 11 shattering of consumer confidence, the data do not support this assertion.
Even more interestingly, new Gallup Poll (Oct. 11-14) economic data show that consumers are even more optimistic about their local communities, the businesses where they work, and their own financial situations than they are about the national economy. Of course, consumers may be more optimistic about their local economies and personal situations because the economic disruptions created by the events of 9/11 and the anthrax attacks have been largely limited to selected industries -- airlines, travel, the postal service, and to particular areas of the country -- New York City, Washington, D.C., and Florida. On the other hand, it may be simply that a lag effect is taking place -- whereby the real impact of these recent events will take some time before it is realized at the local and personal levels by most American consumers.
Clearly, consumer perceptions of the national economy are now much less optimistic than they were a year ago. Still, if it becomes apparent that the disruptive effects of the recent attacks are not national in scope, then the more optimistic perceptions of consumers about their local communities/businesses and their own personal situations may mean economic recovery is not far away. On the other hand, if the local impact of these events is yet to be realized, then the recession may be deeper and longer than many currently anticipate.
Consumers Perceive a Weak National Economy
Gallup Poll economic data gathered Oct. 11-14 show 38% of consumers rating the economy as good (36%) or excellent (2%). Although this means that consumer perceptions of the economy are now back at their July-August levels, it also contrasts sharply with how consumers rated the economy a year ago. In a Gallup poll conducted Oct. 6-9, 2000, nearly three out of four consumers (71%) rated the U.S. economy as good (57%) or excellent (14%).
October 2001 Gallup Poll economic data also show 55% of Americans saying economic conditions in the country are getting worse while 33% say they are getting better. This also stands in sharp contrast to consumer perceptions of just a year ago (Oct. 6-9, 2000), which were just the opposite -- 54% of consumers said economic conditions were getting better and only 34% said they were getting worse.
Consumers also paint a less than optimistic picture of the national economy when they are asked about their expectations concerning key aspects of the economy during the next six months. Half (51%) say that they expect unemployment to go up a lot (20%) or a little (31%). Approaching half (44%) say that they expect interest rates to go down a lot (9%) or a little (35%). While more than one out of three (37%) consumers say they think economic growth will increase from its current low levels, the rest -- nearly two out of three -- say they expect economic growth to stay the same (29%) or to go down (32%). All of these perceptions seem consistent with the current recession.
As far as the stock market is concerned, almost half (46%) say they think it will go up over the next six months -- not inconsistent with recession, but suggesting some optimism that the current downturn will not last long. Similarly, nearly half (45%) say they expect inflation to go up a lot (12%) or a little (33%). This may also suggest some optimism on the part of consumers that the downturn will be brief, giving room for price increases.
NATIONAL ECONOMIC OUTLOOK TABLE
|
2001 Oct 11-14 |
Total |
Remain |
Total |
|
(sorted by "Total ‘Go up'") |
% |
% |
% |
|
Unemployment |
51 |
15 |
33 |
|
Stock market |
46 |
19 |
30 |
|
Inflation |
45 |
33 |
18 |
|
Economic growth |
37 |
29 |
32 |
|
Interest rates |
25 |
29 |
44 |
Consumers Are More Optimistic About Their Local Economies
Gallup Poll economic data (Oct. 11-14) show 59% of consumers rating conditions in their local economy as good (51%) or excellent (8%). This rating is 21 percentage points higher than the rating consumers give the national economy.
October 2001 Gallup Poll economic data also show 40% of Americans saying economic conditions in their local community are getting worse while 41% say they are getting better -- 8% more than say things are getting better in the national economy.
Consumers also paint a more optimistic -- that is, a less recessionary -- picture of conditions at the companies where they work. Approaching half (44%) say they expect the overall amount of revenue/business at their company to increase a lot (10%) or a little (34%) over the next six months. One out of five (22%) say they expect revenue to go down a lot (4%) or a little (18%).
Similarly, about three out of 10 (29%) say they expect that the price of their company's products and services will go up a lot (4%) or a little (25%) over the next six months. Only one out of 10 (9%) say they expect their company's prices to go down a lot (2%) or a little (7%).
Finally, one out of four (25%) say they expect that the number of workers employed by their companies will go up a lot (5%) or a little (20%) over the next six months. One out of five (20%) say they expect the number of people employed by their company to go down a lot (4%) or a little (16%).
COMPANY YOU WORK FOR INDICATOR TABLE
|
2001 Oct 11-14 |
Total |
Remain |
Total |
|
% |
% |
% |
|
|
The overall amount of revenue or business of your company |
44 |
31 |
22 |
|
The price of your company's products or services |
29 |
57 |
9 |
|
The number of workers your company employs |
25 |
52 |
20 |
Americans Are More Optimistic About Their Own Financial Situation
Gallup Poll economic data (Oct. 11-14) show 55% of consumers rating their own financial situation as good (46%) or excellent (9%). Similarly, 50% of Americans say their financial situation as a whole is getting better while only 30% say it is getting worse.
Consumers also paint a fairly optimistic -- although recession-consistent -- picture of their own financial situations. In particular, four out of 10 (39%) consumers say they expect their incomes to increase a lot (7%) or a little (32%) over the next six months. This is optimistic given their outlook for the national economy, but is consistent with the fact that 44% expect their company's revenue to increase over the next six months.
Still, only one out of five (21%) consumers say they will increase their overall level of spending a lot (5%) or a little (16%). Nearly three out of 10 (28%) say their level of spending will decrease and half say it will remain the same.
About four out of 10 (43%) consumers say they will decrease their debt level a lot (11%) or a little (32%) over the next six months. Only about one out of 10 (12%) say they will increase their debt level.
Similarly, one out of three (33%) consumers say they expect to increase their monthly savings a lot (5%) or a little (28%) over the next six months. One out of seven (16%) say they expect to decrease the amount they save monthly a lot (5%) or a little (11%).
While these conservative attitudes on the part of consumers may seem somewhat inconsistent with their view of their personal financial situations and conditions in their local communities, they are consistent with their perceptions concerning the job market. Seven out of 10 (71%) Americans who are either employed or looking for a job say this is a bad time to find a quality job while one out of four (26%) think it is a good time. This contrasts sharply with the situation about a year ago (Aug. 4-31, 2000) when three out of four (78%) Americans said it was a good time to find a job and 16% said it was a bad time.
In sum, most consumers expect their local communities and the companies they work for to do as well as -- or better than -- they have been doing during the next six months. They also expect their incomes and their personal financial situations to stay the same or improve. Still, given the job outlook and today's well-known economic uncertainties, it is not surprising that most consumers plan to act very conservatively -- spend and borrow at similar or lower levels, and save at similar or higher levels -- over the next six months. Unfortunately, when consumers are acting so conservatively, it is usually more consistent with recession than it is with an economic recovery.
PERSONAL FINANCIAL SITUATION INDICATOR TABLE
|
2001 Oct 11-14 |
Total |
Remain |
Total |
|
% |
% |
% |
|
|
Level of income |
39 |
50 |
9 |
|
Level of monthly savings |
33 |
49 |
16 |
|
Level of spending |
21 |
50 |
28 |
|
Level of debt |
12 |
41 |
43 |
Survey Methods
These results are based on telephone interviews with a randomly selected national sample of 1,011 adults, 18 years and older, conducted Oct. 11-14, 2001. For results based on this sample, one can say with 95 percent confidence that the maximum error attributable to sampling and other random effects is plus or minus 3 percentage points. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
