Economy Ratings Remain in the Doldrums

GALLUP NEWS SERVICE

PRINCETON, NJ -- Americans continue to be in the economic doldrums. Gallup Polls show relatively low ratings of current economic conditions, net expectations that things are getting worse rather than better, and large numbers of people identifying economic conditions as the most important problem facing the country.

The good news is that the downward slide in the public's feelings about the economy seems to have abated over the last several weeks. The bad news is that the net ratings appear to be stagnant, and they are at levels generally below where they were before the 9/11 terrorist attacks.

According to the Sept. 23-26 Gallup Poll, 27% of Americans rate current economic conditions as excellent or good, 47% as only fair, and 25% as poor. In mid-June, the ratio of excellent/good ratings to poor ratings was 37% to 19%. Starting in July, the ratio worsened to 28% excellent/good vs. 20% poor. In mid-August, more people gave the economy a poor rating (28%) than a rating of excellent or good (24%). The current ratio is a net positive, by two percentage points, 27% to 25%, but still among the three worst ratings in the past eight years -- all of which have been measured in the past three months.

Ratings of Current Economic Conditions 2001-2002

The public's rating of current economic conditions was headed south before 9/11, but shot upward in the rally-around-the-flag sentiment that gripped the country immediately after the attacks. The rally was short-lived, and within three months that rating had declined to its pre-9/11 level. It remained roughly at that level until March, when it surged again in the wake of comments by Federal Reserve Board Chairman Alan Greenspan that the recession was over. But the Enron scandal and other reports of corporate corruption, along with worsening economic news, took their toll. After a May high point, the rating declined, reaching an eight-year low in August.

Economy Still Much Better Than in Previous Recession

Though ratings of the economy are now much lower than they were a year ago, they are still much better than they were during the last official recession in the early 1990s. At the end of that recession, in early 1992, only 12% of Americans rated the economy as excellent or good, while more than three times that number, 41%, rated the economy as poor. Even though economists later declared that the recession had actually ended well before the 1992 election, the presidential campaign that year hinged on people's perceptions of the economy, which continued to remain bleak well into 1993. In fact, it wasn't until the middle of 1994 that more Americans rated the economy as excellent or good rather than poor.

Ratings of Current Economic Conditions Since 1992

Expectations for the Immediate Future

Since the beginning of July, more people think that economic conditions are getting worse than getting better. The ratio of 52% worse to 33% better found in the most recent poll, conducted Sept. 23-26, is better than the pre-9/11 results. However, results from the past three months represent a reversal from the sentiments expressed during the spring of this year. At that time, beginning in March, at about the time that Greenspan announced the end of the recession, more people expressed positive than negative expectations about where the economy was headed. However, the net positive ratings declined gradually over the next several months, before becoming net negative in early July. Since then, there has been some fluctuation, but no clear trend in either an upward or downward direction.

Economic Conditions -- Getting Better or Getting Worse?

Most Important Problem -- Economic Conditions

Confirming the worsening public sentiments about the economy, measures of the public's identification of the "most important problem" facing the country show large numbers of Americans mentioning some aspect of the economy. In the latest Gallup Poll on this issue, conducted Sept. 5-8, 35% of Americans identified the economy in general, the job situation, taxes, corporate corruption, or wages as one of the most important problems. This percentage is similar to those measured in July and August, but higher than the percentages measured in the previous four months.

Most Important Problem -- 2001-2002 (Percent Mentioning Economic Problems)

All of these results show little change over the past three months, though significantly worse sentiments than those expressed in the four previous months. Some economists suggest that the economy may be in the process of a "double-dip" recession -- on the way toward a new "second" low, after its aborted recovery last spring. What is not clear is how deep the second dip will be before recovery is in sight.

Survey Methods

The most recent results from each of the two surveys are based on telephone interviews with about 1,000 national adults, aged 18+, conducted Sept. 5-8, and Sept. 23-26, 2002. For results based on the total sample of national adults for each survey, one can say with 95% confidence that the margin of sampling error is +/- 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.