What recovery? Most still see recession
CNN survey finds 84% believe the economy is still in a recession, and that pessimism is growing despite improved economic readings.
NEW YORK (CNNMoney.com) -- Economists are in broad agreement that the Great Recession is over. The American public strongly disagrees.
In a poll of more than 1,000 Americans conducted late last week by CNN/Opinion Research Corporation, 84% of those surveyed believe that the economy is still in recession.
That's a slight improvement from the 87% who believed there was still a recession in the September survey, but it is almost the opposite view of the nation's economists.
An official declaration of an end to the recession that started in December 2007 won't be made until next year at the earliest by the National Bureau of Economic Research. But recent economic readings and surveys of economists all point to a U.S. economy that is growing again.
The economy grew at a 2.8% annual rate in the three months ending in September, according to the latest reading on gross domestic product, the broadest measure of the nation's economic activity.
While the economy continues to lose jobs, the number of jobs lost in November fell to 11,000, the smallest amount of any month since the start of 2008, while the unemployment rate improved to 10% from 10.2%. And a survey of 43 top economists by the National Association of Business Economists in October found 81% agreed that the recession was over.
The survey was taken ahead of that latest jobs reading. It comes as President Obama announced Tuesday that he wants Congress to redirect a certain portion of leftover Wall Street bailout funds toward new job creation measures, including building roads and bridges, "weatherizing" homes to reduce energy bills and lending to small businesses.
But even economists understand why the general public doesn't share economists' view of current conditions. Mark Vitner, senior economist with Wells Fargo Securities, said this has so far been a recovery that only an economist can love, given continued job losses and tight credit conditions.
"I think the end of the recession and beginning of the recovery is very difficult for Main Street America to see," he said. "The bad news isn't coming out as frequently, but there really hasn't been much good news. We're stuck in some sort of economic purgatory."
Vitner said part of the disagreement between economists and the public view of the economy is a difference in how recession and recovery are defined. Economists believe a recession is over and a recovery begins when the economy has hit bottom.
"If you fall into a hole, the time that you're falling is the recession. Once you hit the bottom, the recession is over. But you're still in the hole," said Vitner. "Most non-economists think the recovery doesn't begin until you're out of the hole."
In fact the survey backs up that disconnect between economists' and the public's views.
It found 46% of those surveyed believe that conditions have stabilized and are not getting any worse. But that plurality also believes that means the economy is still in recession.
Economic conditions of those answering the poll also affect the results.
"The recession has hit blue-collar families the hardest," said CNN Polling Director Keating Holland. "More than half of whites who never attended college say economic conditions are still in a downturn. Most whites who attended college say things have stabilized or are starting to get better."
Vitner said that any improvement in the economy so far has produced very modest gains for the average household, as well as the broader economic measures. So people are likely to feel like there's a recession for quite some time.
"The hole is a very big hole this time and the recovery is very modest so it might take us a number of years to get out of the hole," he said.
While economists are typically getting more optimistic, the poll found evidence the public is getting more pessimistic.
The poll found only 15% believe the economy is starting to recover from the problems it faced in the past year or so, down from 17% who saw improvement in the previous poll in September. And it found 39% believe the economy is still in a downturn and conditions are continuing to worsen, up from 36% who believed things were getting worse in September.
And many Americans are still worried things could get a lot worse.
Asked about a risk of another depression, the poll found 43% believing that was somewhat or very likely, a bit worse than the 41% who thought that in a survey in the middle of summer, although well below the 59% who feared another depression when asked in early October of 2008.
The survey described a depression as a period when roughly one out of four workers were unemployed, banks fail across the country and millions of ordinary Americans were temporarily homeless or unable to feed their families.
Asked in general terms how well things are going in the country today, the outlook is more negative than the previous reading for the first time since President Obama took office in January, with 66% saying things are pretty or very bad, up from 63% among those asked that question on Oct. 30 and Nov. 1. Still, that is better than the 79% who believed things were pretty or very bad a year ago.