Holiday sales were worse than anticipated, adding to a list of unfulfilled hopes for the U.S. economy. More jobs have been lost than was projected and oil prices have surged upward more than expected, while both the international economy and U.S. consumer confidence remain weaker than many predicted they would be by now. Could all of this mean that the economy in 2003 will be weaker than expected? Is it possible that all these disappointed expectations will add up to an unanticipated double-dip recession for the U.S. economy?
Gallup's attitudinal economic data suggest that the much-maligned notion of a double-dip recession is much more likely than most economic prognosticators will acknowledge.
Consumers Are Worried About Jobs
New Gallup Poll economic data (Jan. 13-16)* show that 78% of adults who are employed or looking for work say that now is a "bad time" to find a quality job -- the highest percentage since Gallup began tracking these numbers in 1998. It is also a complete turnaround from the 76% who said it was a good time to find a quality job in January 2000.
Consumers Are Worried About the Economy
In the same poll, more than half the public (54%) told Gallup that it feels economic conditions are "getting worse" while only 34% said things are "getting better." Only 22% of the public rated current economic conditions as "good" (20%) or "excellent" (2%), the lowest percentage of Americans giving such ratings since January 1994.
Even more importantly, more Americans rate current economic conditions as "poor" than rate them as "good" or "excellent." Right now, the difference between the percentage of the public rating current economic conditions "good" or "excellent" (22%) and the percentage rating them as "poor" (28%) is -6 percentage points ("good/excellent" ratings minus "poor" ratings). This is the largest negative gap since November 1993 when the difference stood at -16 percentage points.
Bottom Line
As of mid-January 2003, public perceptions of the economy are worse than they have been for a long time. And the majority of consumers expect economic conditions to get worse before they get better. As a result, they are worried about their job security. In other words, public opinion suggests that consumer spending will continue to decline in the months ahead. This in turn, implies an even weaker economy -- prime conditions for a renewed recession.
If a double-dip recession does occur, economic prognosticators are likely to join politicians in terming it an unexpected "war recession." They will blame soaring gasoline prices for reducing consumer spending and the uncertainty of war for holding back business investment. In reality, however, current consumer attitudes suggest that -- barring a wartime rally effect -- we are headed for a double-dip recession in the near term regardless of whether a war actually occurs.
*Results are based on telephone interviews with 1,000 national adults, aged 18 and older, conducted Jan. 13-16, 2003. 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%.
