[P2P-F] attitudes in the U.S. are changing ...

[Michel Bauwens]

*How the Great Recession Has Changed Life in
America*<http://pewsocialtrends.org/2010/06/30/how-the-great-recession-has-changed-life-in-america/#i-overview?src=prc-newsletter>
Rew Research Center
*This poll cuts through the polemics, the politics, and the delusions, and
places us in the bracing world of facts. It is not a pretty picture.*
I. Overview

Of the 13 recessions that the American public has endured since the Great
Depression of 1929-33, none has presented a more punishing combination of
length, breadth and depth than this one. A new Pew Research survey finds
that 30 months after it began, the Great Recession has led to a downsizing
of Americans’ expectations about their retirements and their children’s
future; a new frugality in their spending and borrowing habits; and a
concern that it could take several years, at a minimum, for their house
values and family finances to recover.

The survey also finds that more than half of the adults in U.S. labor force
(55%) have experienced some work-related hardship - be it a spell of
unemployment, a cut in pay, a reduction in hours or an involuntary move to
part-time work. In addition, the bursting of the pre-recession housing and
stock market bubbles has shrunk the wealth of the average American household
by an estimated 20%, the deepest such decline in the post-World War II era,
according to government data.

While nearly all Americans have been hurt in one way or another, some groups
have suffered more than others. Blacks and Hispanics have borne a
disproportionate share of both the job losses and the housing foreclosures.
Young adults have taken the biggest losses on the job front. Middle-aged
adults have gotten the worst of the downturn in house values, household
finances and retirement accounts. Men have lost many more jobs than women.
And across most indicators, those with a high school diploma or less
education have been hit harder than those with a college degree or more.

Whether by choice or necessity, many Americans have already significantly
scaled back their pre-recession borrow-and-spend habits. According to
government data, household spending has gone down, savings rates have gone
up, consumer credit has remained stable and mortgage debt has plunged during
this recession.

The survey finds that the public is starting to see some light at the end of
the tunnel. More than six-in-ten survey respondents (62%) say they expect
their personal financial situation to improve in the coming year-the most
optimistic reading on this question since before the recession began.
Likewise, about six-in-ten (61%) say they believe the damage the recession
has inflicted on the U.S. economy will prove to be temporary rather than
permanent.

This report sets out to present a comprehensive balance sheet on the Great
Recession by looking at economic outcomes, behavioral changes and
attitudinal trends among the full population as well as various subgroups.
Our analysis is drawn from two sources-a comprehensive Pew Research
telephone survey of a representative, national sample of 2,967 adults
conducted from May 11 to May 31, 2010 (see Appendix for details), and a Pew
Research analysis of government economic and demographic trend data.

One striking finding of the survey is that some of the demographic groups
that have suffered the worst economic hits are also the ones most optimistic
about a recovery-both for themselves personally and for the U.S. economy as
a whole.

Blacks and Hispanics are more upbeat than whites. The young are more
optimistic than middle-aged and older Americans. And Democrats are more
upbeat than Republicans, even though Democrats have lower incomes and less
wealth and have suffered more recession-related job losses.

These group differences are apparent not just in responses to specific
survey questions, but also in a set of statistical models that examine the
independent impact of race, partisanship and age on the likelihood that a
respondent will express optimism on six different attitudes about the
economy tested in the survey, controlling for a range of demographic
variables and recession-related experiences. 1 The analysis finds that
blacks, Democrats and, on most questions, younger adults are more likely
than whites, Republicans and older adults to hold positive views about the
national economy and their personal finances, regardless of their income,
education, gender or whether they have had difficulty paying their bills,
making mortgage or rent payments; getting or paying for medical care; or
have had to cut spending during the recession.

One likely explanation for these seemingly counterintuitive patterns is that
in an age of highly polarized politics, Democrats and Republicans differ not
only in their values, attitudes and policy positions, but, increasingly, in
their basic perceptions of reality.

This is not the first Pew Research survey taken in the past year that shows
that the election of Barack Obama (which came at the height of the recession
in November 2008) appears to have put his most enthusiastic
supporters-especially blacks, Democrats and young adults-in a more positive
frame of mind than Obama’s detractors about many aspects of national life. 2

For example, since Obama was elected Democrats have become more optimistic
than Republicans about the state of the national economy. For most of the
time that George W. Bush was in office, the reverse was true: Republicans
were more upbeat-often, much more upbeat-than Democrats.

In addition to race, party identification and age, the logistic regression
models include gender, education, income and whether the respondent had
experienced recession-related problems to predict the respondents' views on
the current state of the economy, their personal financial situation and how
they think their family will fare financially in the coming year. ↩
For similar findings of this nature from another Pew Research Center survey,
see 'Blacks Upbeat about Black Progress, Prospects, ” January 12, 2010.

II. An Historical Perspective

Modern-era recessions in the U.S. have generally been less severe than those
of the 19th and early 20th centuries. But this one stands out for two
features that, taken together, validate its by-now-familiar designation as
the worst recession since the Great Depression.

The Surge in Long-term Unemployment: The typical unemployed worker today has
been out of work for nearly six months (23.2 weeks). This is almost double
the previous post-World War II peak for this measure-12.3 weeks-in 1982-83.
Long-term unemployment of this magnitude and duration raises a vexing
question: Beyond a 'normal” cyclical downturn, might the U.S. economy be
going through some long-term structural changes that will lead to relatively
high rates of unemployment for years to come?

The Meltdown in Household Wealth: This recession has eroded more household
wealth than any other episode in the post-World War II era-not surprising in
that it was triggered by the bursting of bubbles in both the housing and
stock markets, the two principal sources of household wealth. According to
the Panel Survey of Income Dynamics (PSID) 3 , median household wealth
decreased by an estimated 19% from 2007 to 2009. On a percentage basis, this
loss of wealth was greater among middle-income households than among those
in either the lower or upper income tiers. Similarly, it took a much bigger
percentage bite out of the (relatively modest) wealth of black and Hispanic
households than of white households.

Two-and-a-half years after this recession began, it’s easier to take stock
of its effects than to be certain of its duration. The nation’s gross
domestic product has been registering gains for nearly a year, leading some
economists to asse
rt that the recession is already over-and has been for some time. But with
the nation’s overall unemployment rate remaining stubbornly high-9.7% as of
May 2010-the quasi-official arbiters of the nation’s business cycles at the
National Bureau of Economic Research4. The NBER is a private, not-for-profit
economic research organization based in Cambridge, Mass. It counts more than
1,000 professors of economics among its research associates. Since forming
its Business Cycle Dating Committee in 1978, it has been the quasi-official
arbiter of the timing of expansions and recessions in the U.S. economy.]
(NBER) have yet to declare that it is over. To further complicate matters,
this doesn’t necessarily mean it isn‘t over. Because of the way the NBER
operates, there is often a lag time of a year or more between its
declaration of the end of a recession and the date that recession is
retrospectively said to have ended. (For details, see Chapter 2).

3. PSID, started in 1968, is a longitudinal study of U.S. families, that is,
it follows the same families and individual members of those families over
time. It features an oversample of low-income families. The original sample
size was about 4,800 families, and it has grown since to about 8,000
families today. A refresher sample of immigrant families was added in 1997
to keep the study representative of the U.S. population. The study is
conducted at the Survey Research Center, Institute for Social Research,
University of Michigan.

III. The Recession: An Overview

It Ain‘t Over Till It‘s Over: The public shares the NBER’s caution about
declaring the recession over. More than half (54%) of the respondents to the
Pew Research survey say the economy is still in a recession, 41% say it’s
beginning to come out of the recession and just 3% say the recession is
over. Whites (57%) are more inclined than blacks (45%) or Hispanics (43%) to
say the recession is ongoing. Republicans (63%) are more inclined than
Democrats (43%) to say the same.

Half Say Their Finances Are in Worse Shape: About half of Americans (48%)
say their household’s current financial situation is worse now than before
the recession. About one-in-five (21%) say they are in better shape. The
rest say there has been no change. Grouped by income, those at the lower end
of the scale are most likely to say they are in worse shape. Grouped by age,
those in late middle age (50 to 64) are the most likely to say they are in
worse shape.

Many Foresee a Long Road to Recovery: Among those who say their family
finances have lost ground during the recession, 63% predict it will take at
least three years to recover. Blacks are more optimistic than whites that
their recovery time period will be two years or less (55% versus 29%). Among
college graduates who lost ground, fully 30% believe it will take six or
more years to recover. Among those who did not attend college and lost
ground, just 18% see a recovery period of six or more years.

A Growing Lower Class? Asked to place themselves into one of five
socioeconomic classes (upper, upper-middle, middle, lower-middle and lower),
a slightly higher share of Americans put themselves in the lower two groups
now than before the recession began-29% now vs. 25% in March 2008. Half say
they are middle class (down from 53% in 2008), while 20% place themselves in
the upper two classes (virtually unchanged from 2008). Blacks, as a group,
are an exception to this overall pattern. The share of blacks who now
identify with the upper class has gone up during this recession, to 20% now
from 15% two years ago.

Not Everyone Got Whacked: Even in these bad times, some people have made out
OK. As noted above, about two-in-ten (21%) adults say their household
finances are in better shape now than before the recession began. Among all
currently employed workers, 20% say they were promoted or found a better job
during the recession. And about four-in-ten say they have gotten at least
one raise during the past 30 months (a proportion that is likely much lower
than it would have been if the economy had been more robust).

IV. The New Frugality

Making Ends Meet: Americans have changed their lifestyles in many different
ways to make ends meet during this recession. More than seven-in-ten (71%)
say they have bought less expensive brands. Nearly six-in-ten (57%) say they
have cut back or canceled vacation plans. About half (49%) say they have
loaned money to someone, and 24% report having borrowed money from someone.
Three-in-ten say they have cut back on alcohol or cigarettes. Nearly
one-in-ten (9%) say they have moved back in with their parents (among adults
ages 18 to 29, this figure rises to 24%). Overall, higher-income adults
report making fewer of all these lifestyle adjustments than do lower-income
adults. Likewise, adults ages 65 and older report making fewer of them than
do younger and middle-aged adults.

Neither a Spender Nor a Borrower Be: More than six-in-ten (62%) Americans
say that since the recession began, they’ve cut back on household spending.
Half say they have reduced the amount they owe on mortgages, credit cards,
car loans and other borrowing. Of those who have savings or retirement
accounts, more than four-in-ten (42%) say they’ve adopted a more
conservative approach to saving and investing, compared with just 8% who say
they’ve taken a more aggressive approach. These new habits of thrift and
caution could well outlive this recession. Asked to predict their financial
behaviors once the economy recovers, 48% say they plan to save more, 31% say
they plan to spend less and 30% say they plan to borrow less. Only small
percentages say the reverse-that they plan to save less and borrow and spend
more.

V. Retirement Worries

Retirement Confidence Down: Even though the stock market has rallied by more
than 50% from its recession-era bottom in March 2009, Americans have
continued to lose confidence in their ability to afford retirement. Some 32%
of adults now say they are 'not too” or 'not at all” confident they will
have sufficient income and assets for retirement, up from 25% who said the
same in February 2009. This uncertainty is greater among younger and
middle-aged adults than among older adults. It is also greater among adults
with low incomes.

Retirement Delayed: Among adults ages 62 and older who are still working,
35% say they’ve already delayed retirement because of the recession. Among
adults ages 50 to 61 who are currently employed, six-in-ten say they may
have to delay retirement because of the recession.

Raiding the Cookie Jar: Four-in-ten adults (41%) who have a checking,
savings or retirement account say that during the recession they have had to
withdraw money from their savings account, 401(k) account or some other
retirement account to pay their bills. Younger and middle-aged adults report
having done this at higher rates than those ages 65 and older. Lower-income
adults have done it at higher rates than have upper-income adults.

VI. Short-term Optimism; Long-Term Uncertainty

Next Year Will Be Better: More than six-in-ten (62%) adults say they expect
their financial situation to improve in the coming year, compared with just
19% who say they expect it to get worse. That is the most upbeat reading on
this measure since September 2007, just before the recession began. Among
the most optimistic demographic groups are blacks (81% expect their finances
to improve in the coming year), Hispanics (74%) and 18- to 29-year-olds
(85%).

But Will Our Children Do Better?
During the past decade, Americans have grown increasingly skeptical about
the standard of living of future generations-and this skepticism has
deepened during this recession. Today fewer than half (45%) of adults
believe that when their children become the age they are now, their children
will enjoy a better standard of living than they have now. Even more
striking, 26% now say their children’s standard of living will be lower.
This is a 'positive/negative” gap of just 19 percentage points on a question
that tests the public’s faith in a core tenet of the American dream-the idea
that children grow up to live better than their parents. At the start of the
recession in early 2008, this gap was 35 percentage points. In 2002, it was
51 percentage points. Overall, blacks, Hispanics and young adults are more
upbeat about the idea of generational progress than are whites and older
adults.

Public Says Mix of Economic News Is Unchanged: About two-thirds of adults
(65%) say that these days they are hearing a mix of good and bad news about
the economy, while 30% say they are hearing mostly bad news and just 4% say
they are hearing mostly good news. These shares have barely budged in the
past year. However, back in December 2008, when the recession was about a
year old, fully 80% of adults said they were hearing mostly bad news about
the economy.

Recession Impact: Permanent or Temporary? Most Americans (70%) believe that
the recession has inflicted major changes on the U.S. economy, but most
(61%) say that these changes will prove to be temporary. Older adults are
more downbeat than younger adults (21% of those ages 50 and older see major,
permanent changes, compared with just 13% of those ages 18-24); college
graduates are more pessimistic than whose with a high school diploma or less
education (22% of the former see major, permanent change, compared with 14%
of the latter); and Republicans are more pessimistic than Democrats (22% vs.
12%). When asked a similar battery of questions about the impact of the
recession on the way they live their lives, a smaller share of
respondents-just 8%-say they believe the changes will prove to be both major
and permanent. An additional 12% say the changes will be minor and
permanent.

Still the Land of Prosperity? By a two-to-one margin, 63% to 31%, Americans
agree with the statement that 'although there may be bad times every now and
then, America will always continue to be prosperous and make economic
progress.” Blacks, Hispanics, Democrats and young adults register the most
optimistic views on this question. Also, those who self-identify with the
middle class are more optimistic than those who classify themselves as upper
or lower class.

VII. The Labor Force

The Unemployment Blues: High as they are, measures such as the unemployment
rate (9.7% in May 2010) and the median length of unemployment (23.2 weeks)
still don’t fully convey the scope of the employment crisis that has
unfolded during this recession. A broader measure from the U.S. Bureau of
Labor Statistics that also includes involuntary part-timers and other
marginal workers puts the combined unemployment and underemployment rate at
16.6%. And the Pew Research survey finds that among all adults in the labor
force, fully 32% say that they are either now unemployed or that they had
been unemployed for some period of time since the recession began.

The Long-term Blues: Of all currently-unemployed adults, 46% have been out
of work for six months or more, by far the highest share measured by the
U.S. Bureau of Labor Statistics in the post-World War II era. Short-term
spells of unemployment typically do not lead to significant breaks in career
paths or major financial losses-but long-term spells often do.

The Payday Blues: The unemployed are not the only ones hit by this
recession. More than four-in-ten (42%) currently employed workers say that
during the recession they have experienced at least one of the following:
had their hours reduced (28%); had their pay cut (23%); had to take unpaid
leave (12%) or saw their full-time jobs shrink to part time (11%). Workers
across all demographic groups were affected, but these blows landed most
heavily on minorities and workers with only a high school diploma or less
education.

Career Impact: About a quarter (24%) of all adults-and 43% of all currently
unemployed adults-say the recession will have a big impact on their ability
to achieve their long-term career goals. Also, workers who lost a job during
this recession but have since found a new one (26% of currently employed
adults) are less likely than other workers to say they are satisfied with
their job and more likely to say they are overqualified.

VIII. The Recession Hits the Home

The Housing Bubble Bursts: About half of all homeowners (48%) say the value
of their house has declined during the recession (26% say 'a lot,” and 22%
say 'a little”). A third say their homes have held their value during the
recession, and one-in-eight say their homes have increased in value.
Homeowners most likely to report their home lost value include those who are
middle-aged, upper income and live in the West. Also, Republicans (52%) are
more likely than Democrats (42%) to say their house has lost value.

'Underwater”: More than two-in-ten (21%) of all homeowners say they
currently owe more on their mortgage or other home loans than they could
sell their house for in today’s market. In real estate vernacular, they are
'underwater.” Hispanic and black homeowners are more likely than whites to
be in this circumstance; lower-income homeowners are more likely than
upper-income homeowners to face this problem, and middle-aged homeowners
more likely than either younger or older homeowners to be in this situation.

Not Coming Back Anytime Soon: Among those who say their houses have lost
value during this recession, the overwhelming majority believe it will take
at least three years for values to return to pre-recession levels. This
includes 47% who say they expect it will take three to five years and 39%
who say it will take six years or longer. Just 10% say they expect a
recovery in two or less years. Despite this, eight-in-ten Americans agree
that a house is the best long-term investment the average person can make.
(However, the share who 'strongly agree” with this statement is just 39%
now, down by 10 percentage points from the share who said the same in a 1991
survey.)

-- 
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