The Numbers

A Run at the Latest Data from ABC's Poobah of Polling, Gary Langer

Gary Langer is director of polling at ABC News, where he's covered the beat of public opinion for nearly 20 years - conducting and analyzing ABC News polls, evaluating data from other sources and setting the news division's standards for poll reporting. Langer has won two Emmy awards for ABC's reporting of public opinion polls in Iraq, and The Numbers blog was honored this year as winner of the 2008 Iowa Gallup Award for Excellent Journalism Using Polls.

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Confidence to the Rescue? Don't Hold Your Breath.

March 06, 2009 8:32 AM

With unemployment soaring to 8.1 percent in today’s Labor Department report, it's fair to wonder when consumer confidence finally will lead the economy to recovery.

The answer: Maybe never.

Not that the economy won't recover; just that confidence may well not lead it. That was the experience in the last deep recession in 1990-1991: Confidence in current economic conditions, as measured in the ongoing ABC News Consumer Comfort Index, didn’t regain its pre-recession level until late 1994, more than three and a half years after that recession technically ended.

There’s good reason, much of it detailed in our poll last week on the contours and causes of economic anxiety. It demonstrates that economic confidence isn’t merely an attitude, but rather a reflection of reality - specifically the reality of job losses, pay cuts and the loss of investment savings. People who have experienced these (or who've had friends or family members get the chop) are far more likely to lack confidence.

A regression analysis supports that conclusion. Being hurt financially in this recession, suffering a job loss or pay cut in the household, or, if not, having a family member or friend sustain a job loss or pay cut, all are significant, independent predictors of economic anxiety, measured both by financial insecurity and by cutting back on personal spending. Further, in a paper I co-authored back in 2003, we found that unemployment is one of the single biggest correlates of consumer confidence.

That is logical – if you’ve gotten hammered, you’ve pulled in your horns. But the fact that today’s lack of confidence is rooted in actual experience makes it danged hard to talk it away. A guy with appendicitis doesn’t need a shrink; he needs a surgeon.

President Obama's been trying a little of both. On one hand he talked up stocks earlier this week, saying their valuations are starting to look good – the jawboning approach. On the other, he said he expects confidence to recover only slowly, as his stimulus package produces job growth.

Slowly could turn out to be a bit of an understatement, given the experience of 1990-91. ABC's consumer index, figured on a scale of +100 to -100, was -14 in June 1990, just before the recession began. It dived to -31 by March 1991, when the recession technically ended. But it kept worsening, bottoming out at -50 in February 1992. Its recovery was so slow that it regained and held its pre-recession level only in December 1994, four and a half years after the recession began, and three and three-quarter years after it officially ended.

That was too late for George H.W. Bush. In 1992 he declared the recession over, and in a narrow sense (rising GDP, and whatever else the Business Cycle Dating Committee uses in its alchemy) he was right. (Back story here.) But it was not over in a way that was apparent to ordinary Americans, in terms of job security, advancement opportunities, rising incomes, secure savings and the like - a reality that cost Bush re-election. Consumer confidence recovered not when the president said it should, but only when Americans felt economic improvement in their daily lives.

Today our consumer index is -49, well within sight of the record low in 23 years of weekly polls it hit Jan. 25. As covered in our latest CCI report, 95 percent of Americans say the economy’s in bad shape (it’s been more than 90 percent for a record 17 weeks), 76 percent call it a bad time to buy things (it’s been more than two-thirds for 68 weeks, second only to a stretch from 1990-93), and 52 percent say their personal finances are hurting (half or more for 32 weeks, surpassed only by a 40-week run in 1992-93).

There has been some look-ahead improvement – the number who say the economy’s “getting worse” has moderated to 58 percent, after spiking to 82 percent in October. Still that’s a lot of pessimism, and a mere 8 percent say the economy is getting any better.

Expectations are the consumer metric to watch most closely; they tend to anticipate the end of recessions better than ratings of current economic conditions. But whatever the measurement you use, with current views as grim as they are, informed by data such as today’s jobs report, a recovery in confidence will take more than talk. It’ll take progress, and from all appearances, that’ll take time.

March 6, 2009 in Economy | Permalink | User Comments (79)

User Comments

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Well according to the GOP government should not be involved, just sit back and watch everything collapse. Somehow that is going to relieve all the tension, and worry that the public feels, and when they find that companies are no longer laying off, then we will begin to spend.

Oh I can feel the confidence growing allready.

Posted by: Thinking | Mar 6, 2009 9:23:36 AM

GOP has commons sense, you cannot lower unemployment by adding more govt. employees, period. pretty soon, it will be one taxpayer to one govt. employee. The stimulus makes no sense, the Omnibus is nothing but pork, and Obama plays the violin while the US burns.....we need more than maybe, and stay the course. I may not make 40K a year, but I am smart enough to buy a house I could afford, keep myself employed with healh insurance, and actually pay my taxes. Maybe if all the dems who owe taxes would pay up our national debt would be lower? That's a change I can believe in.

Posted by: USdoomed | Mar 6, 2009 9:40:06 AM

Hey, it's change "we" can believe in.

It's the new era of accountability. Somebody else's, of course, not Obammy's.

Heh.

Posted by: Mr. Incredible | Mar 6, 2009 9:41:07 AM

How does the government expect confidence to grow when:

1. None of the people that perpetrated this mess are being held accountable, i.e. arrested and jailed?

2. The government keeps filling the these very same pockets and wants to keep doing so?

Posted by: Ted Johnson | Mar 6, 2009 9:47:19 AM

==Well according to the GOP government should not be involved, just sit back and watch everything collapse.==

The majority in Congress, which holds the purse strings, is Dem. The man who signs the bills is in theWhite House and he is Dem. The Dems are in control, and they said everything will change on 20 January. Everything changed, all right, but not the way Libs expected.

So, if anybody is sitting back and watching things go to c ra p, it's the Dems who have the power to do something and who have chosen to go Socialist, and THAT isn't working.

Posted by: Mr. Incredible | Mar 6, 2009 9:54:07 AM

==None of the people that perpetrated this mess are being held accountable...==

In fact, Libs deny that the ones who are responsible are NOT responsible.

Remember the mid-nineties when Barney Frank and Christopher Dodd and Bill Clinton said that everybody should be in the position to have a house?

Remember that they rejected regulation of the mortgage-lending industry?

Remember, then, how mortgage lenders immediately offered subprime loans to people who were so stupid that they didn't think that, later, they might not be able to afford the ballooning payments?

Remember '03, when Senator McCain offered a bill to regulate mortgage lenders and Barney Frank said that mortage lenders are all ok and need no regulation?

Remember '03-'04, when President Bush warned of the crisis we are in now?

Republicans WANTED regulation. Dems REJECTED regulation. YOU do the math.

Posted by: Mr. Incredible | Mar 6, 2009 10:00:56 AM

Libs deny that the ones who are responsible are NOT responsible.---> Libs deny that the ones who are responsible are responsible.

Posted by: Mr. Incredible | Mar 6, 2009 10:02:11 AM

There's only so much optimism in Obama's ability can do. Results will be necessary for a true economic turnaround.

Posted by: matt | Mar 6, 2009 10:02:46 AM

If you want to understand how we got here read Meltdown by Thomas Woods, he nails it. Then ask yourself why the corporate media won't report about it...

Posted by: hmn... | Mar 6, 2009 10:06:24 AM

Unemployment rate at 8.1 not BAD?? Who are you kidding. Want the economy to move faster to recovery. Get the people (8.1) unemployed back to work and we are off to a great start.

I am having trouble with the 8.1 unemployed! Is this the number collecting unemployment now? What about the people who's unemployment ran out, are they counted?

Posted by: Kathy | Mar 6, 2009 10:07:21 AM

==There's only so much optimism in Obama's ability can do. Results will be necessary for a true economic turnaround. ==

However, with sooooo much optimism going into the Obammy Admin and how giddy his supporters were after the January 20 immaculation, you'd think that it would carry the day. After all, outlook is very important to the markets, for instance. Consumer confidence is supposted to be based on, well, confidence. None of this has happened the way we were told it would happen. Neither the markets, nor consumers, are confident, and, even though some elements of the economy lag by eighteen months, investor and consumer confidence aren't among them; they are day-to-day, minute-by-minute, and their being in the tank is part of the Obammy economy.

Posted by: Mr. Incredible | Mar 6, 2009 10:08:52 AM

Well according to the GOP government should not be involved, just sit back and watch everything collapse.


The GOP offered up an alternative plan to the "stimulator". Democrats rejected it. So when you say they just want to sit back and watch it, your LYING!

Posted by: Mike_C | Mar 6, 2009 10:10:12 AM

Adding more government jobs sounds nice, but is it?

As someone pointed out above, we could be at a 1:1 ratio. What would that really solve? Nothing. It takes a private sector taxpayer to pay the wages of a government employee. Even if that government employee pays taxes, that doesn't count. So they give back a fraction of their taxpayer income, big whoop.

Posted by: John thinking it throughh | Mar 6, 2009 10:11:28 AM

==If you want to understand how we got here ...==

We got here cuz-a foreclosures; people had and have houses whose mortgage they cannot afford. Banks don't get their money. They cannot lend money to businesses for payroll and other things they need. They lay off. Those people don't buy and don't pay. Other businesses don't get their money. They lay off and don't buy, and so on.

This is the result of the lack of regulation of the mortgage-lending industry.

In the mid-90s, the Dems -- the likes of Barney Fran, Christopher Dodd and Bill Clinton -- rejected regulation of the mortgage-lending industry; they said that eveybody should be able to afford a house, and mortgage lenders followed that signal by offering people subprime loans they wouldn't be able to afford laters, as we find out.

Republicans wanted regulation of mortgage lenders.

Senator McCain drafted mortgage-lender legislation in '03. Frank and the Dems rejected that, saying that the mortgage-lending industry is solvent and healthy.

President Bush, in '03-'04, warned of the crisis we're in now, and, STILL, Dems won't admit they did anything wrong.

Remember that Republicans WANTED regulation. Dems REJECTED regulation.

Posted by: Mr. Incredible | Mar 6, 2009 10:17:58 AM

Maybe confidence would be higher if we didn't have one political party constantly pushing corporate welfare, whining about "socialism" if a single American tax dollar is used for Americans in America (instead of, apparently, corporate contracts for overseas adventures) and was capable of taking any responsibility for any mistakes made when it held power.

Somehow the GOP believes that if they gnash and whine and cry and scream and bully enough, the American people will put them back into the driver's seat. But at this point, the only thing I think Americans will feel if the current Administration fails is that it is time to permanently dump both political parties and their arrogant claim to entitlement.

Posted by: kevinbgoode | Mar 6, 2009 10:19:09 AM

We have an idiot at the wheel. I have always said GW Bush got a bad rap. This mess that we are in now just goes to show you how well he was able to hold things together.

Posted by: Jim | Mar 6, 2009 10:19:14 AM

==The GOP offered up an alternative plan to the "stimulator". Democrats rejected it.==

This is ALSO true.

Dems want this country to fail. THAT's the only explanation.

Posted by: Mr. Incredible | Mar 6, 2009 10:19:27 AM

Wow the blame Clinton card has already been played, and clearly the Republican control of government for the past 8 years (including 6 of having all branches of government in control followed by two years setting new records for filibusters protecting their status quo) NEVER HAPPENED.

The Grand Ol Republican Party: The Buck Stops Over There. With a Democrat. Probably Clinton.

Posted by: jhw539 | Mar 6, 2009 10:20:40 AM

John Thinking it Through:" It takes a private sector taxpayer to pay the wages of a government employee. Even if that government employee pays taxes, that doesn't count."

You have me convinced. We should fire them all - get rid of the useless policemen and the university professors who teach students (including foriegn students who pay high out-of-state tuition taking a bite out of our trade deficit). The government never produces anything of value, they just fund pork-barrel projects like inventing and laying the backbone of the internet, or Hoover Dam, or useless junk like that.

Posted by: jhw539 | Mar 6, 2009 10:24:53 AM

==Somehow the GOP believes that if they gnash and whine and cry and scream and bully enough, the American people will put them back into the driver's seat.--

"Gnash and whine and cry and scream and bully" won't do it. Voters' realization of their mistake last year will put Republicans back into the driver's seat.

==But at this point, the only thing I think Americans will feel if the current Administration fails is that it is time to permanently dump both political parties and their arrogant claim to entitlement. ==

Libs like to resort to a "scortched Earth" solution: They understand that they are wrong but won't admit it, and, so, they say BOTH parties are to blame.

No, the fact is that the Dems' rejecting regulation of the mortgage-lending industry is what started all this. Republicans WANTED regulation. THIS is what we'll remember in '10 and '12.

Posted by: Mr. Incredible | Mar 6, 2009 10:24:55 AM

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