Introduction and Summary

Americans are beginning to believe the nation’s economy has turned the corner. This month’s ABC News/Money Magazine poll showed a sharp spike in economic confidence, while other recent surveys have found that a declining number of people view the economy as the nation’s top problem.

But significant storm clouds remain from the public’s point of view. People have yet to see their own financial situation brighten, and they are very worried about jobs. The latest Pew Research Center survey shows that by more than two-to-one (51%-21%), the nation is losing ground, not making progress, in creating good-paying jobs. By comparison, in February 2001, just 36% said the nation was losing ground on the jobs front.

This suggests that, despite all the encouraging economic news of late, it may take some time before the public is fully convinced that the recovery is real. It also could indicate that the current optimism is somewhat fragile and may fade unless the employment picture continues to improve.

Recent polls show signs of rising economic confidence, tempered with a dose of caution. The snapshot ABC News/Money Magazine poll found the clearest indications of optimism ­ 47% said the economy is getting better, up from 29% just a month earlier. But a Bloomberg News survey reflected a more nuanced view: a majority (56%) believes the economy will improve over the next year, but nearly as many (47%) said they expect the recession to drag into 2003.

Such ambiguous attitudes toward the economy have influenced the way people view national conditions, and their own financial status. Signs of a nascent recovery have not led to an improved view of national conditions. If anything, the trend is going in the opposite direction: just half expressed satisfaction with the state of the nation in an early March Pew Research Center survey, down from 61% in a February Gallup survey. Similarly, there has been no improvement in the way Americans view their personal finances: in the Bloomberg poll, 50% rated their finances as excellent or good, while nearly as many (48%) characterized their personal financial situation as fair or poor. Those numbers have barely budged over the past year.

The public’s economic anxiety, as the Pew survey found, is centered on jobs ­ not unemployment, but rather the prospects for landing good jobs. Bloomberg found that personal worries over layoffs have not risen during the recession, yet there has been a modest decline in the number expressing confidence they could quickly find a comparable job if they were laid off. The proportion saying they are “very confident” of finding a similar job has decreased from 55% last April to 43% in the current survey.

Economic Concerns Down

Clearly, concerns over a tight job market have political implications. Polls suggest that the White House and Republicans are well positioned for the fall elections, but prospects for a “jobless recovery” are hardly encouraging for the GOP.

The good news for Republicans is that decreasing numbers of Americans rate the economy as the nation’s most important problem. In the latest Pew survey, just 8% volunteered the economy as the top problem; by comparison, three times as many (24%) mentioned terrorism. That continues a trend from recent Gallup surveys ­ in early March, 18% cited the economy as the top problem, down from 24% in February.

As long as terrorism dominates the agenda, Republicans have a huge advantage. Overall, the GOP holds a 38%-27% edge over the Democrats in handling the nation’s most important problem. This is the largest Republican margin over the Democrats on this key indicator since the heady days of spring 1995, shortly after the Republicans gained control of Congress. But the GOP’s lead could prove less significant than it appears, as it is primarily based on greater confidence in the party on the terrorism issue rather than economic and domestic issues. Among those who cited terrorism, the Republican advantage is 49%-19%. But the Democrats hold their own on the economy and other domestic issues.

In addition, the continuing focus on terrorism has not changed the public’s sense that the nation is losing ground on some key domestic issues. As many say the nation is losing ground on health care now (54%) as did so in February 2001. A 45% plurality believes the nation is losing ground on education, down from 53% in February 2001. The only major change has come on the availability of good paying jobs, where there has been a 15-point increase in the number who say the nation is losing ground.

The previous recovery showed that it takes time ­ along with robust economic growth ­ to change the public’s negative perceptions of the job market. As late as December 1996, when the recovery was well underway, 51% still said the nation was losing ground in creating good jobs. It took until November of the following year for that figure to drop substantially to 37%.