The Great Recession lasted a year and a half, ending in June 2009, but the scars are much longer-lasting. A new study reveals widespread pessimism among the American people, even with a strengthening economic recovery.
A majority of Americans believe the economic recovery is going to be slow going, if it happens at all, according to a survey from the John J. Heldrich Center for Workforce Development at Rutgers University. Fully 54 percent of Americans believe the economy will either take 6 to 10 years to recover or will not fully recover from the Great Recession. An even larger share—60 percent—believes that the recession permanently changed "normal economic conditions."
"The fundamental point was that, despite the evidence of an improving economy, their attitudes of an economy and the American workforce and labor market is either just as bad as it was two and a half years ago, or worse. I think it reflects how devastating the recession was on some people," says Carl Van Horn, director of the Heldrich Center and one of the report's authors.
The survey shows that Americans' outlooks have only improved moderately from 2010, when unemployment was well above 9 percent. The jobless rate is now vastly improved, at 7.9 percent. Today, 43 percent of Americans are very concerned about unemployment, compared to just over half then. The figures for job security are even less improved: 49 percent were very concerned about job security then, compared to 43 percent now.
Why are Americans so dour? In part, the vast majority either felt or saw the recession's effects firsthand. Nearly 8 in 10 respondents said that either they or someone they knew was laid off as a result of the recession. In addition, many Americans' finances were ravaged by the downturn. A majority—56 percent—in January 2013 reported having less in savings than when the recession began. Nearly half used money from savings or retirement to make ends meet. And over one-third say they cut back on medical treatment.
But Van Horn also points out that Americans get nervous even when the economy is booming.
"Even in the late 1990s, there was some unease because of the volatility and uncertainty of the American labor market," he says.
It's possible that Americans are overly pessimistic, but the job recovery does look like it will still be slow going. In December, the Federal Reserve projected unemployment to continue its gradual decline, to a range of 6.8 to 7.3 percent next year and 6.0 to 6.6 percent in 2015. It's only in its longer-run projections that Fed members foresee that rate getting below 6.0 percent and into the range where it was pre-recession. With a full job recovery years away, that may mean that Americans' attitudes could also be a long way from improving.