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Economic Pessimism Shows No Signs of Lifting

by Ruy Teixeira

Economic pessimism has reached rather extraordinary levels in the last couple of months. And that pessimism shows no signs of lifting. Here are the latest data from Gallup on the public’s view of the economy:

Americans . . remain pessimistic about the direction in which the economy is headed—just 24% say it is getting better and 68% say it is getting worse. Those numbers are slightly more negative than they were in late August (63% said the economy was getting worse before Hurricane Katrina).

The last time Gallup measured ratings this negative was just before the start of the Iraq war in March 2003, when 67% viewed the economy as getting worse.

Pessimism is also evident in the public's expectations about different aspects of the economy.

Seventy-five percent expect inflation to increase in the next six months.

A majority, 52%, believes unemployment will increase during that time.

Seventy-eight percent expect interest rates to increase in the next six months.

More believe the stock market will go down (33%) than go up (29%). Thirty percent expect no change in the stock market. This is the first time since July 2002 that more Americans have been pessimistic rather than optimistic about the stock market.

About as many expect “economic growth” to decrease (37%) as predict it will increase (36%). This is the first time since Gallup began tracking this measure in October 2001 that there haven't been significantly more optimists than pessimists on growth.

Additionally, 62% of Americans believe it is a “bad time to find a quality job,” while 35% believe it is a good time. Those numbers have been fairly steady this year.

[D]uring the boom years of 1998 to 2000, [as] measured in joint surveys by the University of Connecticut and Rutgers University, Americans [were] much more positive about jobs. In those surveys, 69% to 78% of those who were employed or who were unemployed and looking for work, said it was a good time to find a job.

Ah, those were the good old days! One can only assume that the public is starting to remember those days with considerable nostalgia.