Americans still wary about U.S. economy

Six years after the Great Recession ended, only about a quarter of Americans have a positive view of the U.S. economy and its prospects, though significantly more feel good about their personal financial situation, according to a new USA TODAY/Wells Fargo survey.

The findings underscore that although perceptions have improved along with the economy, the scars of the downturn have left Americans warier and less optimistic about the future.

“We’ve come a long way from two, three, four years ago, when people were completely shell-shocked,” says Mark Zandi, chief economist of Moody’s Analytics.

But he adds, “I do think people are still cautious and haven’t really bought into the idea that this economy is performing well. The dark shadow of the recession continues to hang over the collective psyche.”

Americans’ leery outlook, he says, could be a reason consumer spending has advanced but failed to take off despite significantly improved household finances. And it could influence voters’ choices in the 2016 presidential election.

Twenty-seven percent of those surveyed rate the U.S. economy as good or very good, while an equal share say it’s poor or very poor. And only 26% expect conditions to be better a year from now, while 23% believe they’ll be worse, says the USA TODAY/Wells Fargo Real Economy online survey of 3,533 U.S. adults done in early June.

“Folks don’t see nearly as much opportunity with the economy today as they did in the past,” Wells Fargo Senior Economist Mark Vitner says. Their viewpoints, he adds, are likely influenced by their own employment situation.Their subdued appraisals are at least partly grounded in reality. The economy has grown by slightly more than 2% a year since the recovery began, a modest pace. Federal Reserve Chair Janet Yellen has cited a lingering hesitancy by banks to lend, businesses to invest and consumers to splurge in the wake of the recession’s hammer-blow.

Kathy Staran, 56, of Bloomfield, Mich., was rocked by the real estate crash and recession. The construction manager and interior designer is still earning only about a tenth of her former income, and lost her house to a short sale in 2012. She eats out less often and is selling her clothing and other possessions on eBay to make extra cash. She rates the national economy as very poor and her local Detroit Metro area economy as worse.

“It’s hard not to be disillusioned when I struggle to make ends meet, and pay my bills with much lower income than I previously had,” she says.

Americans, however, are generally more upbeat about their communities. About half rate their local economies as good or very good and only 14% have a negative view. Twenty-eight percent expect local conditions to be better in a year, and just 13% are pessimistic.

The results likely reflect a “local bias” but also indicate that respondents’ outlook on the national economy may be exaggerated by the often-skeptical views they draw from the media, Zandi says. Their opinions of their communities, meanwhile, are largely informed by local business activity.

Survey participants were surprisingly downbeat about key elements of the U.S.  economy, particularly the labor market. Slightly fewer than three in 10 believe there’s a growing job market or opportunities for workers to advance, even though monthly payroll growth is averaging a solid 208,000 this year and hit a 15-year high of 260,000 in 2014. The unemployment rate has fallen to a near-normal 5.3% from 10% in 2009.

The low jobless rate belies a labor market that still isn’t firing on all cylinders. “Lots of folks are working in jobs (for which they’re overqualified), they’re not working as many hours as they’d like and (many are) working part time,” Vitner says.

Zandi points to average annual wage gains that have stagnated at about 2% since the recovery began in 2009. That, he adds, likely is coloring Americans views of the broader economy. Noting there have been recent signs pay increases are accelerating, he adds, “Once we see real wages rising in a significant way, they’ll feel much better about everything.”

For now, few Americans have positive views of other pillars of the economy, and Vitner says they’re at least partly accurate:

• 22% say the education system prepares a skilled workforce.  Many Americans are bombarded with reports of employers’ inability to find skilled workers.

• 22% say they have the ability to have a financially secure retirement. A recent Federal Reserve survey found that 31% have no retirement savings or pension.

• 22% say the US has a reasonable cost of living. Although inflation has been low, apartment rents have risen sharply and health care costs have soared for many people, Vitner says.

• 17% say the U.S. has a strong middle class. The outsourcing of manufacturing jobs overseas, and the decline of unions are among the factors that have diminished the middle class.

Despite their restrained views of the economy, half of Americans feel good or very good about their financial situation and 42% expect it to get better in a year. Households have whittled down their debt, are feeling more secure in their jobs and have benefited from substantial stock and home price gains since 2009.

Mark Gershman, 56, a building material salesman, lost more than half his pay in the downturn, forcing him to draw down about two-thirds of his savings. But the Scottsdale, Ariz. resident says his income has more than recovered, and he feels he’s headed for a financially secure retirement. He views both the national and local economy as good.

But he says, he’s far less freewheeling these days. He no longer spends about $200 a month on new clothing and dines at less expensive restaurants. Instead, the avid runner says, he's spending "more on experiences," such as taking part in marathons across the country, "and less on material things." His health insurance coverage foists a growing cost burden on him and he and his peers are “one medical disaster away” from financial stress.

“With rising medical costs and the potential for long-term care on the horizon, we’re uncertain what we’ll need to survive and prosper in our retirement years,” he wrote in an email.

Nearly half of those surveyed cited the high cost of health care as an obstacle to achieving their financial goals. More than a third pointed to struggles saving enough for retirement; 26%, a lack of good jobs in the area, 25%; the difficulty of getting a raise or promotion; and 21%, student debt.

Some are more bullish, especially workers in thriving sectors. Lewej Whitelow, 28, a project manager for a cloud computing company, has notched two promotions since switching jobs a year ago  after getting none during a three-year tenure at a similar firm. He’s so optimistic that the Dallas resident plans to move to New York and launch his own technology company within a year.

“If I do fail… I would find another job,” he says. “Even two years ago,  I would not have made that move.”