A lot of economic experts are warning that the recovery from the epic financial implosion that went into full blossom last fall will be slow. But there are unmistakable signs that consumers are getting a different message. Their mood is on the upswing. The Pew Research Center asks the question in the headline of one of its latest studies: Are consumers “cock-eyed optimists of self-fulfilling prophets?”
If we knew for a fact that what consumers as a group believe is indeed fact, the numbers are very encouraging. According to PRC, the percentage of those believing that economic policies are on the right track as of May is 53%, up from 50% in March and only 31% in January. In the same period, those thinking policy is on the wrong track have declined from 48% in January to 39% in May. More people are answering the question, but the way – 21% didn’t know or declined to answer in January, compared to only 8% in May.
PRC asked what Americans are hearing about the economy, and published results for every month from December 2008 until May 2009. Watch the trajectory of those saying they were hearing mostly bad news. It went from a whopping 80% in December, and has steadily declined: 67%, 60%, 51%, 39% and finally a mere 31% in May.
In the same period, those hearing a mix of good and bad has risen, from 19% to 30%, 37%, 46%, 56% and finally 64% in May.
For the record, those hearing mostly good news have mostly hovered in the 2%-4% range, and quite possibly require some form of therapy or are only accessing news from the mid-to-late 90s.
PRC finds the consumer optimism amazing, particularly in view of rampant unemployment and foreclosures.
It noted that the public was out of sync with the experts just a couple of years ago, but then, the experts were the optimists, despite the fact that the housing market was starting to go. “But, the average American, while still relatively oblivious to the housing hangover, viewed the overall economic outlook as bleak,” observed PRC.
In summary, PRC wrote, “Still, many Wall Street watchers wonder whether an economic rally can be sustained with interest rates on the rise and the dollar on the downside. On the other hand, there is such a thing as a self-fulfilling prophecy. Until the mood soured, the average American’s eagerness to borrow and buy had kept the nation’s merchants, if not its manufacturers, humming for the better part of three decades. Whether a revival of consumer optimism will — or can — or should — put the U.S. economy back on a steady long-term footing is, of course, not the sort of question that can be settled by a public opinion survey.
RBR/TVBR observation: If consumers are in a good mood, whether they have any right to be or not, they’re more likely to spend money, and spending money is one of the keys to getting the economy rolling again. If spending does in fact get the economy rolling again, consumer security will return. Could it happen? Hope so.