Gallup has a critical poll out today that makes no mention of Barack Obama or Mitt Romney, but tells us something about the economy.
For the first time in more than five years, slightly more Americans are feeling financially better off than they were a year ago, rather than worse off, by 38% to 34%. This represents a significant improvement since May of President Barack Obama’s first year as president, when the majority — 54% — said they were worse off.
This trend line has come down dramatically since the beginning of the year, from a 20-point lead on feeling worse off to a 4-point deficit.
What could account for this? The economy has improved, but growth is hovering under 2%. Unemployment has come down decently if you look at the topline numbers, but not enough to keep up with population. And most of the improvements in the topline numbers comes from people falling out of the labor force (though some of this is expected because of baby boomer retirements).
I think we can chalk up some of this to the rise of perceptions on housing. The “wealth effect” is a demonstrable economic phenomenon. If home prices rise, and particularly if people get out from underwater on their homes, they feel like their economic situation has improved, and as a result they feel like they can spend money again. Deleveraging contributes to this, though a lot of that reduction in debt has comes from defaults. The rise of short sales, however, puts less of an economic price on those defaults, with the individual forgiven of the remaining debt (though their credit score does take a hit). So rising short sales, refinancing and the wealth effect can give people the perception that they’re better off. Or at least not worse off, and that’s the number that’s actually moving. “Better off” only increase from 37% to 38% from May to today; “worse off” dropped significantly, from 42% to 34%.
This also speaks to a divide within the economy right now, between consumers and businesses. Consumers feel pretty good about themselves, economic indicators show; but businesses are gloomy, perhaps because they see the headwinds from things like the fiscal slope. In addition, corporate profits would drop as government deficits drop, and they don’t want that.
Steve Benen games out the electoral implications. But I wonder what happens if and when businesses and consumers come into line on the economy. Who exactly will move to the other side? And what will the effect of deficit reduction, particularly near-term deficit reduction, be? Are we headed to Morning in America or 1937?






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Yeah, Americans, “that light at the end of the tunnel” is a freight train headed your way. Don’t worry the plutocrats will be there to pick over the carcasses.
I work in social services and if you judge a society by how the bottom 20% are doing the answer is clearly 1937. More austerity will just make the bottom 20% not so lonely as the people hanging on to the lower middle class fall out. Health insurance, pay stagnation, energy price manipulation, taxation, interest on debt, and the possibility of a major expense with little or no credit or equity will sink the overall consumer driven economy will drop into recession again. I shudder to think what the brainiacs in charge will come up with next after austerity fails. Maybe the New Deal (Green Version) will rise again from the ashes of Depression.
“Americans feel …”
ALL Americans?
Kind of a broad statement, isn’t it?
Perhaps I simply know too many who don’t feel that way, at least they tell me they don’t.
Must be low-down lyin’, un-American scalawags and miscreants?
Gotta be.
Of course, I’m a wee bit prejudiced, because I agree with them.
Besides, don’t we have to wait until AFTER the election to start singing “Happy days are here again …”, what with “things” hanging in the balance?
Your last paragraph gives me pause, DDay, the caution bubble is expanding …
DW
I know of a few people who “feel” better about their own economy because they finally lost their house to foreclosure or have given up trying to save it. Like it’s finally over so now I feel better not hey we stopped taking on water and I can see the shore from here feel good.
i dont think “housing” has anything to do with it. In day to day life people wonder why stuff is still being built when there is an obvious glut….
Am I better off? YES!!!! but its nothing to cheer about. I have a BS parttime job — ok technically its “full time” we just have “flexible” hours that never add up to full time. So I do have income coming in. But I’m literally one paycheck away from starving – literally.
The only people I know still concerned about “housing” are upper middle class who really havent been effected by any of the downturn.
The sheep are getting used to being shorn.
Any statistic released by MSM or “our” Government that depicts an improving economy should be suspect. Don’t trust but verify. I have not seen with my own eyes any improvement since two years ago and mostly less resources for the average person overall. To wit I live in an upper middle class neighborhood and there are more empty homes than two years ago not less. More empty store not less and more people mowing their own lawns than using gardeners (if that’s an indicator).
Yeah, pretty broad and misleading headline (though cleared up in the Gallup quote): only 38% of Americans are feeling better off than a year ago.
Yeah, well… apparently Americans also feel it’s just fine to murder innocent women, children and men with drones (it’s so… anti-septic!), extra-judicially assassinate American Citizens, including teenage boys (due process is so …quaint!… just ask Eric Holder) and consume (waste?) over 25% of the world’s resources while maintaining the most expensive and vicious war machine (Pentagon) in the history of man in order to feel good about the psychotic myth of American “exceptionalism.”
I stopped caring what Americans “feel” a long time ago. Being well adjusted to our sick, criminal and self-absorbed culture is the anti-thesis of being well-adjusted.