Most Americans Say the Recession Isn't Over Yet
Economists may say the most recent recession ended about 16 months ago, but most people aren't buying it.
About three out of four Americans say the U.S. is still in a recession, with Republicans and women slightly more pessimistic about the U.S. economy than Democrats and men, according to a recent AOL/Poll Position survey.
About 81% percent of Republicans believe the U.S. remains mired in economic stagnancy, compared to about 60% of Democrats, according to a survey of almost 1,100 U.S. adults conducted on Oct. 26. Additionally, about four out of five women say the recession isn't over, compared to about 70% of men, reflecting the predominance of women making decisions about household spending.
Among ethnic groups, Latinos appear to be most pessimistic about the economy, with 90% saying the U.S. remains in a recession.
The poll reflects an economic landscape where consumers are feeling less confident even as overall spending is on the rise. Consumer sentiment fell slightly in October from September and is at its lowest level in 11 months, despite the fact that the economy grew at a 2% clip during the third quarter.
"The growing disparity of income among the very rich and the rest of us is having a more destructive impact on the economy," said Sally Greenberg, executive director of the Washington-based National Consumers League. "That's undermining basic levels of optimism people used to have about bettering their economic situation."
The key culprits may be an unemployment rate that's not budging and housing sales that remain substantially below last year's levels.
While U.S. existing home sales rose 10% between August and September, they were still 19% lower than a year earlier, while the median sales price was down about 2% from a year earlier, the National Association of Realtors said on Oct. 25. NAR Chief Economist Lawrence Yun characterized the pending recovery from the most recent housing crisis as "choppy."
"Much of the consumption of the last decade was driven by consumers who took wealth out of their bubble-driven home prices, and its entirely expected that consumer spending will not have recovered in the wake of that collapse," said George Peng, vice president at corporate and venture advisory firm Stepping Stone Capital Partners, and a Democrat. "You add in health care costs increasing rapidly, as well as world commodity prices starting to move, and its once again unsurprising that people are feeling the pinch."
Meanwhile, the economy lost 95,000 jobs in September and the unemployment rate, which remained at 9.6%, has been at least 9.5% for 14 months, the longest such stretch since the 1930s, according to Labor Department statistics.
"From a technical economic perspective, the recession is over," said David Shulman, senior economist at the UCLA Anderson Forecast. "From the point of view of Main Street, it won't be over until the economy is generating 250,000 jobs a month on a consistent basis.
A recession is defined as a time period when Gross Domestic Product (GDP) falls for at least two consecutive quarters, and is generally accompanied by rising unemployment, a drop in the stock market or a housing-market decline. The National Bureau of Economic Research said last month that the recession, whose start date was pegged at December 2007, ended in June 2009.
More than a year later, though, economic signals appear mixed at best. GDP grew 2% during the third quarter, in line with economists' expectations, the U.S. Commerce Department said Friday. And consumer spending increased at a 2.6% annual pace in the quarter -- its fastest pace since the fourth quarter of 2006, and up from 2.2% in the second quarter.
Still, consumer sentiment fell slightly in October and is at its lowest level in 11 months, Bloomberg News said in its own survey on Friday.
"The economy certainly isn't as healthy as it needs to be," said Greenberg. "I'm not qualified to say if we're still in a recession, but perception plays a big role."