Recession Put the Squeeze on American Optimism

Homeownership, at 65.2 percent of all U.S. households, is nearly back down to levels last seen in the mid-1990s. The most recent homeownership peak—albeit an unsustainable one, driven by private subprime lending and ill-considered public policy—was 69.4 percent. While homeownership dropped, individual bankruptcies skyrocketed, and the lingering effects of that surge are still weighing down attitudes.

According to a recent Pew Research Center survey on Americans’ attitudes about the economy, nearly half of the population —45 percent—believe the economy is only “fair,” while 37 percent characterize it as “poor.” The center also offered a number of reasons why respondents were sour, or partly sour, on current economic conditions.

First, even though the official unemployment rate has been edging down recently, the employment-to-population ratio among 25- to 54-year olds, meaning the percentage of employed adults as a share of the total civilian population in that age range, hasn’t recovered. Before the recession, the ratio tended to be above 80 percent; as of June 2013, the ratio was 75.9 percent.

Also, homeownership, at 65.2 percent of all U.S. households, is nearly back down to levels last seen in the mid-1990s. The most recent homeownership peak—albeit an unsustainable one, driven by private subprime lending and ill-considered public policy—was 69.4 percent. While homeownership dropped, individual bankruptcies skyrocketed, and the lingering effects of that surge are still weighing down attitudes. Chapter 7 and Chapter 11 both peaked in 2010 at 1.07 million filings and 431,000 filings, respectively. The totals have been dropping since then, but are still historically high.

The survey did find a more positive indicator, however: household debt is still dropping. As a percentage of disposable (after tax) income, consumer debt is now at 5.1 percent; just before the recession, it was 6.3 percent. Mortgage debt as a percentage of disposable income is down as well, from 11.3 percent in 3Q07 to 8.7 percent in 2Q13, though that partly represents the loss of millions of homes because of the housing crash.

Recession put the squeeze on U.S. birth rate, too
The National Center for Health Statistics, in its latest analysis of the direction of the U.S. population, reported recently that the recession seems to put a damper on population growth. Historically, population both responds to economic trends and, in the longer run, helps shape them (the classic example of the 20th century being the baby boom).

According to the agency, births in the United States for the 12-month period ending December 2012 were 3,958,000, essentially unchanged from the 3,953,593 births for 2011. The overall trend in the number of births is down for the recession and post-recession periods, having declined steadily from the historic high of 4,316,233 in 2007.

The fertility rate in the United States for 2012 was 63.2 births per 1,000 women aged 15–44, unchanged from the rate in 2011. Like the number of births, the trend in the fertility rate is down, having declined steadily from the recent high of 69.3 in 2007 through 2010.

In the absence of much short-term economic data on Monday—there’s going to be a lot more during the rest of the week—Wall Street meandered around on Monday, and ended the day mixed. The Dow Jones Industrial Average lost a scant 5.83 points, or 0.04 percent, while the S&P 500 was off 0.12 percent. Tech stocks did better, with the Nasdaq gaining 0.27 percent.