American Pessimism Intensifies Toward the Economy and Finances

More than three quarters of Americans think the economy is on the wrong track, as pessimism about the economy, home prices, and household finances continues to deepen, shows Fannie Mae’s August National Housing Survey.

Negative opinion regarding the economy has risen to 78% up from the previous month’s 70%, with only 16% believing it is on the right track. In the same vein, 27% of Americans believe home prices will drop still further, and 22% of those surveyed are expecting their financial situation to worsen in the next year, representing the highest levels pessimism for both indicators since August 2010, says Fannie Mae.

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Source: Fannie Mae August 2011 National Housing Survey

“The degree to which consumer attitudes appear to be sensitive to global events is interesting, and seems to be reflected in their view of the economy and their growing overall pessimism,” said Doug Duncan, vice president and chief economist of Fannie Mae, in a statement. “I believe the public was looking at the U.S. debt, deficit, and the ensuing political struggle with one eye, and looking at Europe and their sovereign debt issues with the other eye, and saying: ‘This is not what we want.'”

August was the third month in a row in which survey respondents said they expect home prices to decline over the next year, with an average expectation of a 0.5% drop. It’s no surprise, then, that only 9% believe it’s a good time to sell a home, down from 11% in July. Conversely, August saw an increased number of people saying it’s a good time to buy, up three percentage points from July to 69%.

As far as household finances go, 41% of those surveyed reported significantly higher expenses compared to last year, slightly up from July’s 40%.

Written by Alyssa Gerace

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  • Alyssa,

    OK, I’m confused.

    “It’s no surprise, then, that only 9% believe it’s a good time to sell a home, down from 11% in July. Conversely, August saw an increased number of people saying it’s a good time to sell, up three percentage points from July to 69%.” 

    While the first sentence seems very accurate, the second should probably have the word “sell” changed to “buy.”

    Please verify.

  • The good news about housing is the stability most seem to believe is on the horizon for the next twelve months.  A further drop of only 0.5% from current price levels is about a 0.35% drop from values at the peak.  The bad news is the size of the shadow and pent up inventory has not been dented.  2011 has been another really poor summer selling season. 
     
    Except for housing, the pessimism expressed today is about the same as at about the same point in the Carter Administration.  Since not being alive in either the lifetime of President Herbert Hoover or President Franklin Delano Roosevelt, I have no idea how either of them fared at this point in their respective Administrations. 
     
    This President is certainly more charismatic than Presidents Carter or Hoover but not nearly so charismatic as FDR.  This President is intelligent and somewhat knowledgeable but not anymore than either Presidents Carter or Hoover.  It took a less intelligent man than President Carter to shake up the economy.  It seems we need a similar shakeup once again.
     
    What saved FDR and America seven decades ago was World War II.  What saved America from the policies of President Carter was President Reagan.  The problem is there does not appear to be a Reagan on the rise and hopefully no World War III either. 

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