Call it the summer of our discontent.
The survey asked American consumers if they believed the economy "has already bottomed out and is getting better," "is at bottom and not getting any better or worse," or if it "has not yet bottomed out and will still get worse."
In the June wave, only one income group - those households earning over $100,000 a year - was more optimistic (44%) than pessimistic (37%). This has since flipped, as affluent Americans now appear to have increased their pessimism by 10 points. With the exception of those households in the $35,000-$50,000 income group, the percentage of households saying things have bottomed out and are getting better has dropped since June.
When we examine the data by educational attainment, a similar pattern presents itself. College graduates have become less optimistic (40% to 33%) and more pessimistic (40% to 43%) about the economy. More than that, each educational subgroup has become less optimistic in the past month. Unfortunately, this suggests that reduced consumer spending and product substitution in consumer packaged goods, travel, and other areas will continue for most American households into the foreseeable future.
Last month Americans in the South and West were the most pessimistic, at 50% and 51%, respectively. But in July, the real news came from the Midwest, where economic pessimism increased dramatically (40% to 54%) - possibly as an aftershock of the auto industry's generational restructuring.
If this pattern of economic pessimism holds or does not appreciably improve before the federal mid-term elections in 2010, history suggests that incumbents will struggle against challengers that aggressively pin economic angst on them.
Although it is difficult to predict the end of the recession or the long-term impacts of the so-called "Great Consumer Retrenchment", this data suggests that 2009, and possibly 2010, will be a year marked by economic pessimism.
