Overview

With a growing number of Americans saying they have been hearing “mostly bad” economic news, opinions about the current state of the national economy remain grim. Positive expectations regarding future economic conditions, which remained high even during the depths of the recession, have declined and now stand at their lowest point since mid-2008.

Yet Americans express very different views about their own financial situations. And these impressions, while hardly favorable, have not become more negative over the past several months.

The latest national survey by the Pew Research Center for the People & the Press, conducted June 15-19 among 1,502 adults, finds that 29% expect that economic conditions will be better a year from now while 23% say things will be worse. Last October, more than twice as many said the economy would be better, rather than worse, in a year (35% vs. 16%).

A separate survey, released June 8, found that the percentage saying they are hearing “mostly bad” economic news has nearly doubled since the start of the year, from 24% in January to 46% in June. (For more, see “Number Hearing ‘Mostly Bad’ Economic News Highest Since March 2009.”)

The rise in economic pessimism comes as Barack Obama’s job approval rating has declined. Currently, about as many approve (46%) as disapprove (45%) of Obama’s performance as president. In three previous surveys conducted after the killing of Osama bin Laden, far more had approved than disapproved. (For more on changes in Obama’s job approval, see the detailed tables at the end of this report.)

Satisfaction with national conditions, which rose after bin Laden’s death, also has declined. Just 23% say they are satisfied with the way things are going in the country, down from 30% in early May.

The public’s economic optimism is now at its lowest point since July 2008, shortly before the financial crisis. In the fall of 2008, as perceptions of current national

economic conditions turned more negative, views of future economic conditions improved – and remained relatively optimistic well into Obama’s presidency.

But the percentage saying they expect the economy to be better a year from now has fallen 13 points since April 2010 (from 42% to 29%) and is at the lowest point since Obama took office.

Fewer than three-in-ten Americans (27%) say that Obama’s policies have made economic conditions better, a figure that has changed little over the past two years. Somewhat more (34%) say that Obama’s policies have made conditions worse, while 33% say they have had no effect so far.

In terms of the public’s priorities for economic policy, more Americans (52%) say they would place a higher priority on reducing the budget deficit rather than on spending to help the economy recover. In February, opinion was more closely divided (49% reduce deficit vs. 46% spend to help the economy recover).

While there are wide ideological and partisan gaps on this issue, independents view deficit reduction as the higher priority. More than half of independents (54%) say this should be a higher priority for the federal government, compared with 39% who prioritize spending to help the economy recover.

Financial Views Stable, Financial Pain Persists

Over the past three years, there has been little change in people’s assessments of their personal financial situations. Currently, 38% rate their personal finances as excellent or good, and 56% say they expect their personal financial situation to improve over the course of the next year.

Notably, Republicans and Republican-leaning independents who agree with the Tea Party have a much gloomier future financial outlook than do those who do not agree with the movement. Just 39% of Republican and Republican leaners who agree with the Tea Party expect their personal financial situation to improve over the course of the next year; that compares with 57% of Republicans and Republican leaners who disagree with the Tea Party or have no opinion of the movement.

The survey finds that the number of Americans facing severe financial problems has remained steady over the past year, but is higher than in early 2009.

In the new survey, 29% say that in the past year they have had trouble getting or paying for medical care and 26% say they have had problems paying their rent or mortgage. Another 16% say they have been laid off or lost their job.

Overall, 44% say they have encountered one or more of these financial problems over the past year, which is unchanged from last year but higher than in February 2009 (37%). These problems are increasingly affecting the poor – fully 70% of those with family incomes of below $30,000 have experienced one or more financial difficulty, up from 59% last year.

Moreover, substantial numbers of working people continue to express job-related anxiety: 27% say it is very or somewhat likely they may have their health care benefits reduced or eliminated, while 26% say it as at least somewhat likely they may be asked to take a pay cut. More than half of those who work full- or part-time (55%) say it is likely they may face one or more job-related problems in the next year – a pay cut, benefits cut or losing their job – up from 49% last year.

Amid persistent unemployment and slow economic growth, the public continues to take a very negative view of current national economic conditions. Just 8% call economic conditions excellent or good, while an overwhelming majority (91%) says things are either only fair (45%) or poor (46%).

Economic ratings have been consistently downbeat for more than three years – the percentage rating the national economy as excellent or good has not topped 20% since January 2008. The proportion viewing the economy as poor has fluctuated over the past few months. Currently, 46% rate economic conditions as poor, down from 53% in early April, though up slightly from February (42%).

Across all demographic and political groups, no more than about one-in-ten has a positive view of the economy. Half (50%) of people

with family incomes of $30,000 say the economy is poor, compared with 41% of those with incomes of $75,000 or more. Republicans (52%) and independents (50%) are more likely than Democrats (37%) to view current economic conditions as poor.

The public’s future outlook for the economy also is gloomy, and more negative than it was last year. Nearly half of Americans (46%) say that a year from now economic conditions in the country will be about the same as today, 29% say things will be better and 23% say things will be worse.

Since April 2010, there has been a broad decline in the percentage saying that the

economy will be better a year from now. Only about a third of college graduates (34%) expect the economy to be better a year from now, down from 49% in April 2010. Similar declines have occurred among those with some college experience (12 points) and those with no more than a high school diploma (11 points). Optimism has also fallen among households of all income levels – and affluent homes are no more likely than others to expect conditions to improve over the next year.

Democrats (45%) remain far more likely than independents (24%) and Republicans (16%) to say they think the economy will improve over the next year. However, economic optimism has fallen over the past year among Democrats (by 16 points), independents (12 points) and Republicans (11 points).

Jobs Still Viewed as Scarce

The public continues to take an overwhelmingly negative view of the job situation: 79% say jobs in their area are hard to find compared with just 14% who say plenty of jobs are available. There has been no change since December in views of the job market and the percentage saying jobs are difficult to find has been at or around 80% since February 2009.

The view that jobs are scarce is widely held across demographic groups and there is no difference between partisans. Similar percentages of Republicans (81%), independents (80%), and Democrats (77%) say job opportunities in their area are hard to find.

House Prices Still Seen as Falling, But Hopes for a Rebound

Nearly two-thirds (65%) say that home prices in their area have gone down either a lot (36%) or a little (29%) over the past year. Only 25% say home prices have gone up in that time period. Overall, these assessments are about as negative as they have been over the past several years.

As has been the case since 2007, a majority of Americans (54%) expect that price of homes in their area will go up at least a little over the next few years; 37% say they think home prices will go down a lot or a little.

Perceptions of real estate prices over the past year vary by home ownership status. Home owners – especially those who have a mortgage – are more likely than renters to say that prices have gone down in the last year.

About seven-in-ten (72%) homeowners say that home prices in their area have gone down in the past year, including 76% of those who currently pay a mortgage and 64% of those who own their home outright. By contrast, fewer renters (53%) say it is their impression that home prices have fallen in the last 12 months.

In the Midwest (71%) and West (68%) broad majorities say that home prices in their area have fallen over the past year. In the Northeast and South, somewhat smaller majorities say prices have dropped (59% and 61%, respectively).

These differences largely disappear when it comes to expectations for real estate prices over the next few years. Similar majorities of owners (54%) and renters (56%) think prices will go up in coming years. And almost identical percentages of those in the Northeast (54%), Midwest (54%), South (54%), and West (56%) expect home prices in their area to rise over the next few years.

More than a quarter of Americans say that in the past year they have had trouble getting or paying for medical care (29%) or paying their rent or mortgage (26%); another 16% say they have been laid off in the past year. Overall, 44% report experiencing at least one of these three problems, about the same percentage as last year (43%) and seven points higher than in 2009.

Growing numbers of lower income Americans are facing these problems. In 2008, 43% of adults with family incomes below $30,000 said they had experienced trouble getting medical care or paying for it. In the current survey, 51% of low-income

people say they have faced this problem. By contrast, among those with family incomes of $75,000 or higher, the percentage reporting this type of financial trouble was much lower – just 9% – and basically unchanged over the past three years.

Similarly, 28% of lower income respondents in January 2008 said they had experienced trouble paying their rent or mortgage over the past 12 months. In the current survey, 45% reported this financial difficulty. The percentage of more affluent Americans experiencing this problem is much lower (11%) and has remained stable over the past three years.

Apart from the affluent, people age 65 and older are one of the only groups not broadly affected by one of these three types of economic troubles. Just 13% say they have had trouble obtaining or paying for medical care, 10% have had trouble paying the mortgage or rent, and – not surprisingly given their low level of participation in the labor force– just 3% reported being laid off from a job. Overall, 20% of respondents ages 65 and older reported at least one of the troubles. Nearly half or more of all other age groups experienced at least one of these types of difficulties.

Job Worries Still Common

Anxiety about job security, pay and benefits also continues to be widespread. Overall, more than half of those who work full- or part-time (55%) say it is likely they may face pay or benefit cuts, or a possible layoff or job loss over the next 12 months. The percentage reporting one or more of these possible problems is slightly higher than last year (50%) or in 2009 (47%).

Higher-income workers are about as likely as those who are less well off to express concern about a possible cutback or loss of health or retirement benefits. However, far more lower-income workers say they may be laid off or be asked to take a pay cut.

For instance, 36% of workers with family incomes of $30,000 or less say it is very or somewhat likely they may be laid off; that compares with just 12% of those with incomes of $75,000 or more. The proportion of lower incom

e workers who say they may face a layoff in the next year is unchanged from last year but has nearly doubled (from 19%) in 2009.

Fewer than half (41%) of those who are currently employed say they got a pay raise or found a better job in the past twelve months. That is little changed from last year or 2009. In January 2008, a 56% majority reported having gotten a raise or a new job.

Personal Financial Ratings Unchanged

A majority of Americans (61%) say their finances are in only fair (40%) or poor (21%) shape, while 38% rate their finances as either excellent (5%) or good (33%). Personal financial ratings have changed little over the past three years; since December 2008, the percentage rating their finances as excellent or good has consistently been between 35% and 38%.

Seven-in-ten (70%) of those with family incomes of $75,000 more say they are in excellent or good shape financially, compared with 36% of those with incomes of $30,000 to less than $75,000 and 14% of those earning less than $30,000 a year. Republicans (47% excellent/good) rate their finances somewhat more positively than do Democrats and independents (35% excellent/good).

Durable Personal Financial Optimism

More than half of Americans (56%) expect their finances will improve a lot (7%) or some (49%) over the course of the next year. Just 28% expect their financial situation and that of their families to get a little (21%) or a lot (7%) worse; 13% volunteer that they expect them to stay the same.

While expectations for the national economy have turned more negative since the spring of 2010, personal financial expectations have been more stable. The percentage expecting their finances to improve over the next year is little changed from October (57%) or March (61%) of last year.

As in the past, age is a major factor when it comes to personal financial expectations. About eight-in-ten (81%) of those younger than 30 say they think their finances will improve in the next year compared with 62% of those 30 to 49, 44% of those 50 to 64 and 33% of those 65 and older. Democrats (64%) are somewhat more optimistic about their finances than are independents (52%) or Republicans (51%).

Tea Party Republicans: High Current Ratings, Less Optimism

Republicans and Republican-leaning independents who agree with the Tea Party view their current personal finances fairly positively, but are deeply pessimistic about their future finances. Among Republicans who agree with the Tea Party, about as many (50%) rate their finances as either excellent or good as say they are in only fair or poor shape (49%). By contrast, among Republicans who disagree with or have no opinion of the Tea Party far more say they are in only fair or poor shape (58%) than say they are in excellent or good shape (42%).

Nonetheless, Republicans who agree with the Tea Party express deep concern about the state of their finances over the course of the next year: about as many expect them to worsen (43%) as improve (39%). Republicans who do not agree with the Tea Party, or have no opinion of the movement, are far more optimistic: 57% expect their personal finances to improve a lot or some over the next year, just 28% think they will worsen.

The analysis in this report is based on telephone interviews conducted June 15-19, 2011 among a national sample of 1,502 adults 18 years of age or older living in the continental United States (1,001 respondents were interviewed on a landline telephone, and 501 were interviewed on a cell phone, including 200 who had no landline telephone). The survey was conducted by interviewers at Princeton Data Source under the direction of Princeton Survey Research Associates International. A combination of landline and cell phone random digit dial samples were used; both samples were provided by Survey Sampling International. Interviews were conducted in English and Spanish. Respondents in the landline sample were selected by randomly asking for the youngest adult male or female who is now at home. Interviews in the cell sample were conducted with the person who answered the phone, if that person was an adult 18 years of age or older. For detailed information about our survey methodology, see https://alpha.pewresearch.org/pewresearch-org/politics/methodology/

The combined landline and cell phone sample are weighted using an iterative technique that matches gender, age, education, race, Hispanic origin, region, and population density to parameters from the March 2010 Census Bureau’s Current Population Survey. The sample also is weighted to match current patterns of telephone status and relative usage of landline and cell phones (for those with both), based on extrapolations from the 2010 National Health Interview Survey. The weighting procedure also accounts for the fact that respondents with both landline and cell phones have a greater probability of being included in the combined sample and adjusts for household size within the landline sample. Sampling errors and statistical tests of significance take into account the effect of weighting. The following table shows the sample sizes and the error attributable to sampling that would be expected at the 95% level of confidence for different groups in the survey:

Sample sizes and sampling errors for other subgroups are available upon request.

In addition to sampling error, one should bear in mind that question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of opinion polls.