Right now, the conventional wisdom is that the stock market is not in synch with the overall U.S. economy -- that is, the market seems to be ignoring all the good economic news while experiencing a "crisis of confidence" in corporate management, accounting firms and the Securities and Exchange Commission. But what many economic pundits have failed to fully take into account is that thus far, most Americans have not really seen many benefits from the recovery. Corporate profits have failed to improve as anticipated, and consumer perceptions of economic conditions remain below those of a year ago. Such perceptions are especially weak among certain groups: women and black Americans rate the current economy weaker than other Americans do and considerably weaker than a year ago. Blacks in particular see current economic conditions less favorably than do others, and are much less likely than other Americans to say economic conditions are getting better.
Of course, investors have been telling Gallup for months that "Enronitis" is real and they want reforms now. (See Related Items.) So the negative impact of these investor concerns on the market is not a surprise. The real question is whether the current economic uncertainty and crisis of confidence exists only on Wall Street, or has spread to Main Street -- and is therefore more likely to hinder the economy as a whole. I believe that investors and the markets formed very optimistic expectations that were way out in front of the real pace of the economic turnaround. Now, what was going to be a relatively slow economic recovery is being further burdened by anxious investors, nervous accountants, slow-to-act regulators/legislators and increasingly cautious managers. At this point, my fear is not that the economy will stagnate during the second half of this year -- that looks like a good bet to me -- but that we could actually see a double-dip recession later this year.
Ratings of Current Economic Conditions
New Gallup poll economic data (June 3-9, 2002)* show 36% of Americans rating current economic conditions in the country today as good or excellent. This is down from the 42% who rated the economy good or excellent a year ago. So while consumer perceptions of the current economy are above their 2002 lows (28% good or excellent in Feb. 4-6, 2002), they have not returned to even the relatively low levels of just a year ago.
More men rate current economic conditions good or excellent (42%) than women (31%) do, but the percentages for both men and women are below those of a year ago. About the same percentage of whites (39%) and Hispanics (38%) rate the current economy good or excellent -- the rating by whites is down from a year ago (45%) while the rating has not changed among Hispanics. Far fewer blacks -- only 22% -- rate current economic conditions as good or excellent. And, the good or excellent rating provided by blacks is down from a year ago (31%). More than one out of four black Americans (28%) rate current economic conditions in this country as poor.
Fewer Blacks Say Things Are Getting Better
While many Americans are less positive about current economic conditions than was the case a year ago, they are much more optimistic that things are improving. In the most recent survey, 48% of Americans said they think that U.S. economic conditions are getting better, compared to 38% who say they are getting worse. This is a total reversal from a year ago, when only 29% of Americans said things were getting better and 60% said things were getting worse.
Currently, more men say things are getting better (58%) than worse (30%), a reversal from last year (32% getting better to 55% getting worse). This year, just about as many women say things are getting better (42%) as getting worse (44%). Last year, only 25% of women said things were getting better while 64% said things were getting worse.
More whites (53%) and Hispanics (52%) say economic conditions are getting better than say they are getting worse (33% whites and 40% Hispanics). In both cases, this is a reversal from their perceptions of a year ago. In contrast, the perceptions of black Americans remain virtually unchanged from a year ago. In June 2002, 31% of black Americans said economic conditions are getting better, while 60% said they are getting worse. One year ago, 28% of black Americans said things were getting better and 67% said things were getting worse.
*Results are based on telephone interviews with 1,360 national adults, aged 18 and older, conducted June 3-9, 2002, including oversamples of blacks and Hispanics that are weighted to reflect their proportions in the general population. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±3%.
- Results for the sample of 623 men, aged 18 and older, are based on telephone interviews conducted June 3-9, 2002. For results based on the total sample, one can say with 95% confidence that the margin of sampling error is ±4%.
- Results for the sample of 737 women, aged 18 and older, are based on telephone interviews conducted June 3-9, 2002. For results based on the total sample, one can say with 95% confidence that the margin of sampling error is ±4%.
- Results for the sample of 791 non-Hispanic whites, aged 18 and older, are based on telephone interviews conducted June 3-6, 2002. For results based on the total sample, one can say with 95% confidence that the margin of sampling error is ±4%.
- Results for the sample of 236 blacks, aged 18 and older, conducted June 3-9, 2002. For results based on the total sample, one can say with 95% confidence that the margin of sampling error is ±7%.
- Results for the sample of 263 Hispanics (including 26 Hispanic respondents who identify their race as black), aged 18 and older, conducted June 3-9, 2002. For results based on the total sample, one can say with 95% confidence that the margin of sampling error is ±7%. (Sixty-six out of the 263 interviews with Hispanics were conducted in Spanish.)
