PRINCETON, NJ -- We have names for the letdowns than come after many big events -- post-partum depression, buyers' remorse -- but we don't yet have a name for what the country is undergoing at this time. We might call it "Post Traumatic Rally Letdown."
Many observers predicted that Sept. 11 would cause a massive sense of alarm, worry, and concern on the part of Americans, with a rapid pullback in retail spending, a rush to return to church, and mass resignations from jobs as Americans fled work to "smell the roses" and spend time with family.
We just didn't see this. Rather than having post-traumatic stress after Sept. 11, the terrorist attacks provided the catalyst for an exceptional rallying of public opinion. This rally was based not on the economy, but on the strengthening of internal solidarity that often comes with an external threat. Many of our indicators of mood went up, some dramatically, rather than down, including record high levels of support for the president and Congress.
All of this came after an unusual roller coaster of ups and downs in public opinion we have witnessed over the last several years. In 1999 and 2000, public opinion on many measures soared. Then, in the first nine months of 2001, with the crash of the dot-com boom, the country underwent a substantial decline in most mood and economic measures. Indeed, the Gallup poll conducted Sept. 7-10, 2001-- just before the Sept. 11 attacks -- contained mood indicators that were as negative as any we had tracked for a number of years. In other words, the attacks occurred just as the American mood was bottoming out. Economic measures did not rise dramatically in the months after Sept. 11 (although they did not fall, either), but earlier this year we started to pick up an increase in public optimism about the economy.
But, I think it is fair to say that right now the mood of America is now becoming more negative. The strongly positive rally effect generated by Sept. 11 may be dissipating, and the improvements in the way Americans view the economy have also stalled out. In other words, the roller coaster is starting to go down again.
Here are the facts. Satisfaction with the way things are going in the United States has fallen to 52%. This measure jumped after Sept. 11, reaching a high point of 70% in December. The current reading is at a post-Sept. 11 low.
Congressional job approval is now at 52%. This too marks a new low point since the attacks. Congressional approval skyrocketed to an all-time high level of 84% in October, but has been falling steadily since. The current 52% is roughly where it was one year ago.
As I noted above, the first nine months of 2001 were dismal for consumer confidence. The declines stood in dramatic contrast to the high points of the two previous years. At one point last year, only 19% of Americans perceived that the economy was getting better, as low a reading as we have measured over the past 11 years.
After Sept. 11 economic optimism began to climb, and, by March, broke through the 50% barrier.
But these optimism levels have begun to drift down over the last two months. Our early June reading shows that 48% of Americans say the economy is getting better. This remains a much more optimistic reading than last year's, but the trend is now edging down, not up.
At points in 1999 and 2000, over 70% of Americans rated the economy as excellent or good. These ratings of the current economy began to drop in early 2001 and have not undergone a sustained rally since. A year ago, 41% gave the economy a positive rating. This measure has jumped up and down some in the months since, but has remained mired well below 50%. Now, 36% rate the economy as excellent or good.
Only 35% of workers say now is a good time to find a quality job. This optimism measure is slightly better than it has been in recent months, but -- by way of comparison -- 78% of American workers said it was a good time to find a quality job in August 2000.
The UBS/Gallup Index of Investor Optimism finds that only 59% of investors say now is a good time to invest in the market, the lowest number since last September. The overall Index in May was 90, having settled back to roughly where it was last December, despite upticks in January and March. The UBS/Gallup data suggest that worries over Enron-type accounting may be a major factor in the loss of confidence on the part of investors.
Almost half of Americans say that terrorism/national security/war is the number one problem facing the nation. That's up from last month -- most probably reflecting revelations of what the FBI and CIA did or did not know prior to Sept. 11, plus new warnings from the government of imminent terrorist attacks.
Indeed, our data show that only 41% of Americans in late May said the United States is winning the war on terrorism, down from 66% in January.
There is one indicator that has been a little more immune to these ups and downs -- President Bush's job approval rating. The trends are clear. Bush's job rating zoomed up to a record 90% last fall. Since then it has been drifting downward, as we would expect, but not as substantially as, for example, approval of Congress. Bush job approval is still very positive by long-term standards. It fell in early June to its lowest point since Sept. 11 -- 70%. That was before Bush's June 6 speech to the nation in which he proposed a new Cabinet-level Department of Homeland Security. Bush's job approval rating then rose back to 74%. That may be a result of a generally positive reception to his proposal for a new Department of Homeland Security: 72% of Americans approve.
The president's lower approval rating is due, almost entirely, to the return of Democrats and independents to a more critical rating of Bush. This suggests a return to the normal, politicized environment we expect in an election year.
What do we make out of all of this? As I've noted, we have a cross current of input coming at the American people. The public has recently been bombarded with evidence that the government knew quite a bit about possible terrorist activity in the months prior to Sept. 11, but obviously did not -- or was not able to -- do anything about the attacks. We have received renewed warnings of possible new attacks, including the arrest of a suspected "dirty bomber." The president has announced a new policy by which the United States may strike out at terrorists before we are actually attacked, and there is talk of invading Iraq. All of this is not designed to increase feelings of peace and tranquility.
Plus, there is the importance of the erosion in confidence in big business. All of the reports about Enron, Arthur Andersen, Tyco, ImClone and other corporate scandals do nothing to increase confidence in leadership and the nations' major institutions. And, there are the job market worries I've highlighted above.
Perhaps it is no wonder that the mood of the nation is down right now.
The good news is that none of the indicators are as low as they have been previously, particularly in the early 1990s. Another way of looking at it: There is a good deal of room to grow in terms of consumer attitudes. The economy may have substantial unrealized potential from a consumer perspective. Indeed, we do have one indicator of a positive consumer mood -- the significant majority of Americans are still convinced that they will be better off next year than they are now.