Why do the majority of Americans think that the economy is in such bad shape?

Question

I was talking to my economics professor the other day and he was talking about how the American economy is in the best shape it's ever been (like GDP is at an all time high, growth is strong and constant, cyclical unemployment is at 0, average earnings are up, productivity is up, etc.), but a recent poll showed that most Americans think that the economy is doing poorly.

What would cause people to think that?

Answer 1

It’s somewhat interesting that so many people are blaming the media. The media reports on the statistics from various government offices and some private organizations. For instance, the Commerce Department reported negative savings for 2006. The Census Bureau issues reports on median household incomes. The stats show that median incomes have dropped for most of the past few years.

The Labor Department issues employment statistics and admits that the process doesn’t include all unemployed people. The retail statistics from the Commerce Department show that while luxury retailers are doing well, retailers that sell to moderate and low income individuals are not doing so well.

In addition, private groups issue statistics. For example, the Conference Board issues a Consumer Confidence Index, which is a survey. Retailers, manufacturers, banks and the government pay attention to those statistics. Also, there are various privately-conducted polls that gauge consumer attitudes and the public's general view of the economy, mostly based on their own individual situations.

If you actually examine the statistics that affect ordinary people, which is most of America, they reflect reality. You can therefore understand why the economy does not look good to the average American.

Answer 2

Your economics professor should have explained to you that yes, on appearances the US has a robust economy. The problems are: trade deficit is the largest in US history (2) this is the 1st generation in US history that will live below the means of the previous generation, (3) we have exported JOBS, which means companies and shareholders have done well, but the working middle class has become the overworked lower class, (4) the enactment of NAFTA and GATT has NOT produced lower pricing;quite the opposite, (5)this war is very good for investors of Halliburton, oil companies, etc. but not so much for the US economy, because we went from a surplus in the Clinton years to a 2 trillon dollar debt under W; (6) More US citizens are working multiple jobs than ever before; (7) do we manufacture anything anymore, and if not, how can we maintain our freedom if we cannot provide for ourselves?(8) employers have stopped hiring people full time and limit hours to less than 32 so they don't have to pay benefits, which leaves many Americans without healthcare.

Participation in a global economy should not mean the loss of sovreignty and an economy in which only the ownership and investor class prospers. If people want to fly the flag and give speeches about "family values" we should look at the impact of the economic policies over the past 20 years. They are neither patriotic or Christian.

Answer 3

I cannot speak as to why a lot of Americans think the way they do about the economy. I can only speak as to myself and those around me. I am doing well in some areas and poor in others. I am feeling the effects of higher productivity (I am in manufacturing) resulting in higher profits in my company for several years in a row. The people benefiting most are the shareholders of the company. My raises come on strictly a yearly basis, and they have not kept up with inflation or the cost of living. There are several reasons for this, including: the skyrocketing cost of healthcare, recent company acquisitions, reinvestment of profits, etc. The bottom line is I work for shareholders. They do not work for me.
Overall economic growth is strong and fairly constant in certain areas. The housing market has dramatically slowed. The stock market has been booming. I guess your opinion could be swayed based on what statistics you look at and your current situation. Looking at "average earnings" gives you no perspective of wages. It is a collective statistic.
Debt is at an all time high. The national debt is in the trillions. The affects of these things eventually catch up with most of us.
Overall I'd say I'm doing ok, but very much concerned.
On a side note to another responder, the Clinton adminstration did balance the budget, but only by borrowing hundreds of millions from social security. Our entire government, from top to bottom, on both sides of the aisle, is fiscally irresponsible.

Answer 4

I work harder than ever and haven't had a raise in three years.

Corporate profits may be up up up, but the GDP only rose by .6% last quarter. Some folks are pretty concerned.

Growth for the very wealthy is strong and constant, for the rest of us not so much so. The housing boom is cooling rapidly, and we haven't yet seen the true dimensions of the coming foreclosure wave which is bound to drive home values down. Fuel and healthcare costs are rising at well above the general inflation rate, and companies are cutting the coverage and pensions they offer to new workers, and even some nearing retirement.

If your university told your professor that his pension and benefits were undergoing the same changes seen by employees of several major corporations last year, his assessment of the health of the economy would change rapidly, I assure you.

Answer 5

Well, for one most of the increased earnings have been to the top 5-10%. The rich have been getting richer. Ask your professor what the porverty rate, has been doing in the last 8 years. For another, the economy is slowing down. A sluggish Housing market and increased gas prices has been pinching the pockets of the working class man. This is why you are seeing the consumer confidence numbers dropping. The adjusted 2nd quarter data will show a better picture of the current market, and the trend for the rest of the year.

Answer 6

People who say that just like to go by the statistics.They don`t have to be on the bottom of the totem pole.The only unemployment rate that is low is the one that is regulated by the Unemployment Agencies.The actual unemployment rate which is not on records is actually higher.People run out of unemployment benefits and that is the statistic that is not being recorded.I think that the unemployment office should have some kind of system to where they could continue monitering the actual unemployment rate.We all would be emazed of the actual total amout of unemployed people, if someone would ask the question on Yahoo of who all is unemployed right now and ran out of unemployment bennefits or was not elligeble to receive bennefits .

Answer 7

The USA is "No. 1" in nothing but weaponry, consumer spending, debt, and delusion.
http://www.citypages.com/databank/26/1264/article12985.asp

America by the numbers
No. 1?

No concept lies more firmly embedded in our national character than the notion that the USA is "No. 1," "the greatest." Our broadcast media are, in essence, continuous advertisements for the brand name "America Is No. 1." Any office seeker saying otherwise would be committing political suicide. In fact, anyone saying otherwise will be labeled "un-American." We're an "empire," ain't we? Sure we are. An empire without a manufacturing base. An empire that must borrow $2 billion a day from its competitors in order to function. Yet the delusion is ineradicable. We're No. 1. Well...this is the country you really live in:

No. 1? In most important categories we're not even in the Top 10 anymore. Not even close.

Answer 8

Your economics professor sounds like a defender of Reaganomics. He is probably also in a higher income bracket than most Americans, and so he is advocating policies that benefit him personally, The stats he gave are meaningless, for three reasons:

1. He selected stats that support his argument, but he failed to mention the high levels of consumer debt, the record bankrupties, record defaults on home mortgages, jobs lost to outsourcing, the loss of our manufacturing base to foreign competition, trade imbalance, etc. You should consider these as negative results of the policies that also produced the positive results you named.

2. China holds the bulk of our foreign debt. Communist China. They are not dedicated to Reagonomics, but to world revolution. They could destabilize our economy at will, with one good yank on the rope...

3. The Bush administration falsifies statisitics to make their policies appear successful. I found this out when researching unemployment statistics, but it's endemic throughout all the various departments of government. Trying to do economics with bad numbers doesn't work.

Answer 9

They think the economy is in bad shape because it is. If the majority of Americans lose confidence in the economy, the economy begins a decline.

Answer 10

The real rateof inflation is in the double digits. The prices of food, gasoline, and other products, are increased weekly, in the greatest rip-off since Carter. The U.S. dollar is virtually worthless. The U.S. foreign trade deficit worsens each month, and the national debt is in the trillions of dollars. The reason that most citizens believe the U.S. economy is in such bad shape is simply because they (the citizens) live in the real world.