Recession Over ? Most People Don’t Think So

The numbers tell us we're not in a recession, but the public thinks otherwise.

Last week, the National Bureau of Economic Research announced that, according to their strict definition of what constitutes a recession, the economic downturn that started in December 2007 had actually ended by June 2009. Well, don’t tell that to the American public:

Economic experts may believe the recession is over, but try telling that to the public.

Seventy-four percent of Americans believe the economy is still in a recession, according to a new CNN/Opinion Research Corporation poll. Only 25 percent think the downturn is over.

One-third of Americans say the recession is serious, while another 29 percent characterize it as moderate.

One small cause for optimism: the percentage of Americans who say the country is in a recession has dropped 13 points since August.

This isn’t all that surprising, of course. For the NBER, a recession is defined using economic statistics like GDP growth, industrial production, retail sales, and other number derived principally from government reports using formula that may or may not accurately measure the state of the economy. The people responding to the poll, however, are basing their responses on their own personal economic conditions, those of people they know, and their overall anxiety about an economy that, even if it is growing, isn’t growing very fast at the moment. Public perception, of course, is just as important as economic statistics are when it comes to determining the true state of the economy. If the public thinks we’re still in a recession, or that their income may be in jeopardy in the near future, then they’re going to hold back on spending, which is going to have it’s own impact on the economy as a whole.

There are plenty of signs out there right now at the corporate level that the economy just might be turning a corner. However, until the public starts believing it — which is unlikely to happen until the jobs situation starts turning around — we’re unlikely to see the kind of robust economic growth that’s needed to get the economy back on track.

FILED UNDER: Economics and Business, Public Opinion Polls, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. john personna says:

    I thought this big chart set at the NY Times was interesting:

    http://www.nytimes.com/imagepages/2010/09/24/business/20100925-CHARTS-graphic.html?ref=economy

    Most things, but not all, seem to have turned a corner, but weakly. Industrial production is the one thing, in that set anyway, that has shown a strong bounce back. If those graphs are of similar importance, the recession is looking a bit “L” shaped.

  2. Steve Plunk says:

    While things may be improving until we get back to a more comfortable economic state the public will feel like it’s still a recession. If I’m in a casino starting to win back the thousand dollars I’ve previously lost I’m not whole until I win it all back. We’re a long way from winning back what we’ve lost in this economy.

    You also have to wonder if economists aren’t due for updating old models. Comparing numbers of today to numbers of past recessions decades ago doesn’t make sense. The economy has shifted away from manufacturing, the debt levels are unprecedented, and government involvement in the economy higher than ever. Old measures may not work anymore.

  3. Pete says:

    Our economic engine since the early 70’s was fueled by credit. Until that begins to expand, we will see slow growth and no inflation.

  4. JKB says:

    The beatings will continue until attitudes improve.

    No really, people might as well stay in recession mode as long as the Dems have the wherewithal to plunge them into the deep, dark recession that jacking up energy prices with Cap n Trade will cause. Or maybe the John Kerry’s stupid people are just saving their pennies in order to pay for higher heating bills this winter that the Progressive’s War on Coal will cause.

  5. anjin-san says:

    JKD – You are absolutely right. The economy was firing on all cylinders when Bush was in office. It’s all the Democrats fault.

  6. Eric Florack says:

    Comparatively, yes.

    But more; there doesn’t seem to be a great deal of doubt that the policies enacted by the democrats since taking office in 2008 have made the situation worse than needs be. Then again, they don’t really care about such things. All they care about is being “fair”. Apparently, being fair means spreading the suffering around .

  7. JKB says:

    anjin-san – I said nothing about the economy under Bush. Recession thinking is about the future not the past.

    My point was that people will keep up this recession thinking until they feel confident that the current plans of the current government cannot be implemented since arbitrarily raising energy prices by legislative fiat will cause another actual NBER recognized recession. Same goes for making electricity unreliable by increasing the percentage generated by stochastic (wind, solar) methods without effective full capacity back up.

  8. anjin-san says:

    > My point was that people will keep up this recession thinking until they feel confident that the current plans of the current government cannot be implemented

    Do you honestly think that people are not spending because they are worried about cap & trade or coal policy? Give me a break. When the employment market improves, people will start spending more. When people get their debt positions under control, they will spend more.

    This of course will be mitigated by the fact that the spending power of the working class and lower/mid middle class has been eroding in this country for decades. There are also the issues of structural changes in the employment market to consider.

    All that aside, a lot of major corporations are sitting on large piles of cash now, and productivity gains appear to have topped out. This means CFOs are going to have to start spending on hiring and capital investments if they want to see growth.

    Your comments appear to be motivated by political, not economic considerations…

  9. Brummagem Joe says:

    “There are plenty of signs out there right now at the corporate level that the economy just might be turning a corner.”

    Actually there have been plenty of confirmation ever since late summer/early fall of 2009 that the economy was turning the corner…in fact I’d say the signs were there even earlier. If you didn’t move back into equities in the early summer of last year then I assume you missed the bus Doug? I’ll assume the more brainless comments from others on the state of the economy emanate from those without capital.

    “Most things, but not all, seem to have turned a corner, but weakly.”

    It’s not in least L shaped or average growth for the last four quarters wouldn’t have averaged around 3%. More of a U.

    ” However, until the public starts believing it — which is unlikely to happen until the jobs situation starts turning around — we’re unlikely to see the kind of robust economic growth that’s needed to get the economy back on track.”

    And what is going lead to an increase in employment Doug? An increase in demand perchance? It certainly isn’t going to happen with a reduction in demand which would be the consequence of the policies you advocate.

  10. john personna says:

    Here’s one for Joe:

    Pushing on a String

  11. anjin-san says:

    > But more; there doesn’t seem to be a great deal of doubt that the policies enacted by the democrats since taking office in 2008 have made the situation worse than needs be

    Really? Because the current economy, which is stable, but weak, seems to be a significant improvement on the “brink of depression” economy which GOP polices left us in as the Democrats took office in 2008.

    I do give the Bush admin credit for decent crisis management once the crisis became acute in Sept. 2008. They deserve some credit for keeping the economy from going over the edge.

  12. john personna says:

    I wouldn’t worry anjin, I took JKB’s 11:46 post as a “what can I possibly say bad about Democrats” stream of consciousness. This especially given Cap & Trade(*)’s snowball’s chance in a Gore video of passing.

    * – I’m with Republican Greg Mankiw that if we’re going to do it, do it as a carbon tax. But I’m with libertarian Tyler Cowen that it’s never going to happen. Not because it’s wrong, but because we aren’t built that way. Monkeys want to drive their big cars now, whatever happens later.

  13. ponce says:

    Thank goodness China’s economy continues to grow at an amazing rate or we’d be in real trouble.

  14. Brummagem Joe says:

    “Here’s one for Joe:

    Pushing on a String”

    I’m not sure what point you’re making (and Mauldin is not exactly Nostradamus but then who is?) but three months ago here I was saying that Fed actions were largely likely to amount to pushing on a string (in fact I used exactly that phrase). The only thing that is going to give the economy a short term boost is some more fiscal stimulus and it’s not going to happen becasue of politics. Thus we’re going to have to rely on exports, strong growth in the developing world, a gradual end to domestic deleveraging, rising incomes, increasing business investment, strong corporate profitability, demography etc etc. to take its natural course.

  15. Pete says:

    Joe, you sound like you are talking to yourself. How do those things you suggest we must rely on get triggered? As I said before, the last 40 years was built on credit. Until credit becomes out mantra again, we will grow very slowly. Just because you had money to invest and grow, doesn’t mean the overall economy is structured to rebound. The volume in the stock market is light suggesting that middle America still prefers cash under the mattress.

  16. Steve Plunk says:

    Energy price problems are a genuine concern. High gas prices eat to consumer discretionary spending. High fuel prices add to transport costs. And most importantly overall high energy prices depress consumer and business confidence.

    Drilling moratoriums, cap and trade, telling people you want to put coal out of business, those are things that don’t help. We need a realistic energy policy based in the reality of fossil fuels. This is another of the things the old economic models are failing to account for properly. Ever notice how oil prices rises follow stock prices rallies? Energy prices are acting as a check valve on solid economic growth.

  17. anjin-san says:

    > Energy prices are acting as a check valve on solid economic growth.
    Do you have any data on energy prices 2006-2008 v. 2008-2010 that you can share? Something that shows higher energy costs under Obama than under Bush?  Perhaps you could share some posts you made when Bush was President that address soaring energy costs during his administration.

    If not, well, someone might think you are just making political yap, not talking economics.

  18. john personna says:

    Is that what you got out of it Joe? I got a kick about the “new” fed recognition of dis-inflationary risk, and how I risked the deflationary call here. It lines up with my read then that they might be thinking more than they were saying, at the time.

    You were pretty firm that they’d never let it happen, right?

    If QE2 is pushing on a string, how did you say they’d stop it?

    (It being mild, acceptable, Japan-level, deflation as a lower risk than QE2 gone wild, with its attendant high-inflation risks.O)

  19. Rick DeMent says:

    We need a realistic energy policy based in the reality of fossil fuels.

    Any energy policy that doesn’t take aggressive steps to move away from fossil fuels will screw us all or leave us with air you can chew and any savings will be eaten up with negative externalities.

  20. anjin-san says:

    > We need a realistic energy policy based in the reality of fossil fuels.

    The right is still hard at work on that bridge to 1950.

  21. JKB says:

    “We need a realistic energy policy based in the reality of fossil fuels.”

    Exactly. The policy needs to face two difficult facts. That the economy needs a reliable “storage” fuel – energy dense, easily transportable, works in isolation from supply grid- and that oil, our primary “storage” fuel, will become more difficult to recover and deliver. It must also deal with the need for “usable energy,” which is the energy available when it’s needed, where it’s needed. Solar and wind have very low “usable energy” as their random nature seldom meshes with demand and is uncontrollable. Right now the fantasy energy policy being promoted doesn’t deal with the reality that “renewable” sources don’t provide energy reliably when it is needed, energy storage costs are high multiples of generation costs and that none provide an energy-dense portable storage fuel. The test will be when there is a wind farm manufactured and installed solely with “renewable” energy. That is, now that there are “renewable” energy sources installed, can they provide the energy to extract and transport the raw materials, power the manufacturing process, power the trucks to ship the systems, power the equipment used to clear and prepare the site, power the trucks that drill to install the pylons, power the cranes and power the equipment needed to install transmission equipment across undeveloped country? Until “renewables” are self-sustaining, we need to be looking for other energy sources that can replace oil or provide the energy to synthesize it. And we definitely don’t need to politically inflate the price of the driving force of the economy in the hopes the higher prices will cause some heretofore unrealized panacea solution while leaving the economy decimated if the calvary don’t come over the hill on time.

  22. Steve Plunk says:

    JKB,  Thanks for being patient enough to explain things like energy density to some of the people here.  If they would read a little about energy it would not be necessary.  Oil and coal will be here for some time whether the dreamers like it or not.
     
    As a college freshman in 1980 I took a class on solar energy.  In the 30 years since it has advanced so little it’s shocking.  Sometimes the inherent limitations just cannot be overcome by science and technology.
     
    The recent changes in fossil fuel extraction has been amazing.  Some call the fracturing process and natural gas availability a black swan event.  A change unexpected and significant enough to cause a complete rethinking.  Add in shale oil from Bakken and other places and it becomes obvious the old talk of peak oil and a move to alternatives is nothing but wasted effort and dollars.  Those living off the government subsidies would disagree.
     
    I believe we should continue research into alternative but the subsidies must stop and the real sources of energy promoted.  Not by different subsidies but by relaxing regulations and freeing up land.
     
    This is not backward thinking but forward thinking.  The externalities have been accounted for and the options weighed.  It’s time for realism over fantasies.

  23. john personna says:

    If we were an intelligent species we could live happily within a reasonable energy budget, using the cleaner of the fossil fuels. We aren’t though. And in fairness we aren’t really in charge (here) either. The Chinese are building unfiltered coal plants at an astounding rate, and their negative externalities are definitely not accounted.

    So, shorter Steve Plunk: “We’re screwed, might as well enjoy it.”