Public Now More Pessimistic About Their Personal Finances

by Jeffrey M. Jones

Less than a majority rate their financial situations positively

GALLUP NEWS SERVICE

PRINCETON, NJ -- The national economy has been sluggish for over a year now, and Gallup polling throughout 2002 has shown that Americans tend to be fairly pessimistic about current and future economic conditions in the United States. Nevertheless, Americans have continued to rate their own financial situations positively, and these ratings had been pretty stable throughout the year. However, the national economic struggles may finally be hitting home. The most recent Gallup poll shows a slight but perceptible decline in Americans' views of their personal finances on a variety of measures, including ratings of their current financial situation, whether their situation is getting better or worse, and whether they are currently in a good position to buy some of the things they would like to have.

The poll, conducted August 5-8, shows 47% of Americans rating their financial situation as excellent or good. Since Gallup first asked this question a year ago, this is the first time that fewer than a majority of Americans gave excellent or good ratings to their financial situations. Throughout 2002, but prior to the most recent poll, excellent/good ratings had varied in a small 50% to 54% window.

Rating of Current Financial Situation

The downward trend in Americans' financial situations is also evident in a Gallup question that asks Americans how their personal financial situations have changed in the past year. A July 22-24 poll, taken during the recent low points in the stock market, found 32% saying they were better off than a year ago and 45% saying they were worse off. The 45% figure is among the highest Gallup has measured since this question was first asked in 1976. In February of 1982, 47% of Americans said they were personally worse off than a year ago, the highest single measurement. Comparable ratings of 46% were found in February 1992, March 1983 and August 1982, during similarly tough economic times.

When asked in the most recent poll whether their personal financial situation is getting better or getting worse, 47% of Americans say "better" while 35% say "worse." For most of this year, a majority of Americans held a more optimistic view. Only in the last two months have fewer than 50% said their financial situation was getting better. The 35% who now say their financial situation is getting worse is the highest Gallup has measured in the past year.

Is Your Financial Situation Getting Better>
or Getting Worse?

Forty-six percent of Americans say they are now in a good position to buy some of the things they would like to have, the lowest percentage on this measure in recent months. In late 2001 and early 2002, roughly half of Americans said they were in a good position. This poll question gets at Americans' spending intentions, and although it is just slightly below where it has been in recent months, it could be a sign that some consumers may begin to moderate their spending.

"How Good of a Position Are You In to Buy Some of Things You Would Like?"

Personal Versus National Economic Conditions

Ratings of personal financial situations are much more stable than are ratings of national economic conditions. The recent decline in ratings of personal financial situations is small compared to the 13-point drop in perceptions of national economic conditions Gallup observed between May (41% rated these excellent or good) and August of this year (28%). Reports of financial situations tend to be steady as most Americans' financial situations change very little on a short-term basis, mainly because most Americans' job and income situations do not change very often or very rapidly. It is because of this stability that the recent changes in ratings of personal finances, though unquestionably modest, are notable. It is unclear whether the increasingly pessimistic ratings are due more to traditional economic concerns like job losses, pay cuts or increased debt loads, or to the fact that many more Americans today are invested in stocks and have seen the value of their investments fall sharply in recent weeks.

National economic conditions, on the other hand, are subject to a broader range of forces. Individuals' ratings of the national economy are influenced by media reports, in addition to what they observe happening around them.

Still, it is important to emphasize that Americans remain much more positive in their assessments of their own financial situation than they are of the national economy. Ratings of the national economy as excellent or good have averaged 33% for the year, while ratings of personal finances have averaged 51%.

Comparing Opinion of National Economy and Personal Financial Situation

% Saying "Excellent/Good"

Survey Methods

These results are based on telephone interviews with a randomly selected national sample of 1,007 adults, 18 years and older, conducted August 5-8, 2002. 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.

How would you rate your financial situation today – as excellent, good, only fair, or poor?

 

 

Excellent

Good

Only fair

Poor

No opinion

%

%

%

%

%

2002 Aug 5-8

7

40

39

13

1

2002 Jul 9-11

7

44

37

12

*

2002 Jun 3-6

7

45

33

14

1

2002 May 6-9

8

43

37

11

1

2002 Apr 8-11

9

43

35

13

*

2002 Mar 4-7

8

44

39

9

*

2002 Feb 4-6

8

42

36

13

1

2002 Jan 7-9

9

45

36

9

1

2001 Dec 6-9

9

47

34

10

*

2001 Nov 8-11

8

46

34

12

*

2001 Oct 11-14

9

46

32

13

*

2001 Sep 7-10

7

47

36

10

*

2001 Aug 16-19

8

44

35

12

1



Right now, do you think that your financial situation as a whole is getting better or getting worse?

 

Getting better

Getting worse

SAME (vol.)

No opinion

%

%

%

%

2002 Aug 5-8

47

35

17

1

2002 Jul 9-11

47

34

18

1

2002 Jun 3-6

52

27

20

1

2002 May 6-9

54

28

18

*

2002 Apr 8-11

54

27

19

*

2002 Mar 4-7

55

26

18

1

2002 Feb 4-6

51

28

20

1

2002 Jan 7-9

60

22

17

1

2001 Dec 6-9

59

24

17

*

2001 Nov 8-11

45

33

21

1

2001 Oct 11-14

50

30

19

1



Thinking of your own financial situation just now, how good of a position are you in to buy some of the things you would like to have -- [ROTATED: a very good position, somewhat good, neither good nor bad, somewhat bad, (or) a very bad position]?

 

 


Very good position


Somewhat good

Neither good nor bad


Somewhat bad


Very bad position


No
opinion

%

%

%

%

%

%

2002 Aug 5-8

11

35

26

16

11

1

2002 Jul 9-11

10

38

24

15

11

2

2002 Jun 3-6

13

38

23

14

11

1

2002 May 6-9

11

39

25

15

9

1

2002 Apr 8-11

14

38

25

13

10

*

2001 Nov 8-11

12

37

23

17

10

1

2001 Oct 11-14

14

37

24

13

11

1



* -- Less than 0.5%

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