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Poll: One-Third Of Adults Surveyed Think U.S. In Depression

It’s a recession when your neighbor loses his job; it’s a depression when you lose yours.

-Harry S. Truman, 33rd President of the United States

The “D” word is making a comeback. USA Today’s Mindy Fetterman wrote today:

In a sign that anxiety is growing, 33% of 1,011 adults surveyed over the weekend by USA TODAY and Gallup said the economy already is in a depression (though by economists’ measures it is not). Just 12% said that 10 months ago…

Seventy-three percent said U.S. financial troubles will get worse before they get better. They expect their taxes to go up, and many worry about affording retirement or maintaining their standard of living. Nearly half worry about their homes losing value; 20% are seriously looking at taking money out of the stock market…

Trust is shifting from stocks and real estate to federally insured bank CDs. And nearly 30% have postponed, or are thinking about postponing, a big purchase. Almost half of those with jobs are more worried than before that the Wall Street crisis will mean their pay or benefits will be cut.

Displaced Great Depresssion kids
Bakersfield, California (1935)

Source:

“Poll on the economy: Americans gloomier, for now”
Mindy Fetterman
USA Today, September 29, 2008

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Survey: U.S. Job Market As Bad As 2001 Recession

AP business writer Ellen Simon talked about the U.S. job market in today’s Chicago Tribune. According to one survey, it’s just as bad as it was seven years ago during the last recession. Simon wrote:

American workers’ confidence in the job market is as low as it was during the 2001 recession, according to a survey released Thursday.

When asked whether this is a bad time to find a quality job, 65 percent said it was, matching the level of the 2001 recession, according to the survey by Rutgers University’s John J. Heldrich Center for Workforce Development.

With unemployment at 5.7 percent, the highest level since 2004, and weekly unemployment claims hitting a six-year high earlier this month, workers are worried about everything from their weekly hours to their total pay…

And whether or not they’ll be trading in that nice suit for a Chuck E. Cheese costume before long…

Source:

“Survey: American workers’ confidence in job market as low as during 2001 recession”
Ellen Simon
Chicago Tribune, August 28, 2008

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Poll Shows Eroding Confidence In U.S. Economy

Earlier today, CNN Money’s Aaron Smith talked about CNN poll results which showed three-quarters of respondents believe the U.S. economy is in bad shape. Smith wrote:

Americans’ opinions on the health of the economy have worsened significantly over the last year, according to the results of a CNN poll released Monday.

Seventy-five percent of participants in a national CNN/Opinion Research Corp. poll believe the U.S. economy is in bad shape, compared to just 43% of respondents who shared that view a year ago.

In a poll conducted Aug. 23-24, 43% of those surveyed rated the current economic conditions as “very poor,” while 32% rated it as “somewhat poor.” Only 21% rated the economy as “somewhat good” and a mere 4% said it was “very good.”

The findings are based on 497 interviews and have a margin of error of plus or minus 4.5 percentage points.

Around this time last year, Americans had a significantly less dire view of the economy. A poll taken Aug. 6-8, 2007 found that 17% rated economic conditions as “very poor,” while 26% rated it “somewhat poor.” Furthermore, 45% rated the economy as “somewhat good,” while 11% said it was “very good.”

David Wyss, chief economist for Standard & Poor’s, told CNN Money that the U.S. economy will get worse before it gets better, particularly when it comes to jobs. Smith noted that so far this year, the economy has lost 463,000 jobs (source: U.S. Department of Labor). From the piece:

“I don’t even think we’ve seen the worse of it,” said Wyss, who doesn’t see any evidence of an imminent upturn. “I think we’ll lose another half million [jobs], and possibly another million.”

Source:

“U.S. view of economy is getting worse – poll”
Aaron Smith
CNN Money, August 25, 2008

Worrisome News From The Fed

From the Wall Street Journal’s Real Time Economics Blog yesterday:

U.S. banks continued to tighten their standards on loans to households and businesses in the second quarter, said a Federal Reserve study that also shows that many banks think the credit tightening trend could continue into the first half of 2009…

About 60% of the domestic banks surveyed reported having tightened lending standards to large and middle-market businesses. That’s up slightly from what was reported in the last Fed survey conducted in April and released in May. About 65% of the institutions, a percentage that is also up from the previous survey, also said they had tightened their lending standards on so-called commercial and industrial loans, also known as C&I loans, to small firms over the same period…

In addition, a significant portion of the banks surveyed reported having tightened their lending standards on prime, nontraditional and subprime residential mortgages over the previous three months. About 75% of domestic respondents, which is up from 60% in the previous survey released in May, said they had tightened their lending standards on prime mortgages. Also, six out of seven respondents that originated subprime mortgage loans, which is a higher proportion than what was reported in the previous survey, indicated that they had tightened their lending standards on those loans over the past three months.

Turning to the results of the survey’s consumer lending questions, about 65% of domestic banks indicated that they had tightened their lending standards on credit card loans over the past three months, which is up remarkably from the 30% reported in the survey released in May.

From Reuters’s John Parry earlier today:

U.S. economic growth is expected to slow more sharply in the coming months than previously forecast with employers shedding staff into next year, according to a Philadelphia Federal Reserve survey released on Tuesday.

Economists lowered their forecasts for third-quarter gross domestic product growth to a 1.2 percent annual rate from the previous 1.7 percent estimate, according to the bank’s quarterly Survey of Professional Forecasters.

“Growth in U.S. real output over the next few quarters looks slower now than it did just three months ago,” the Philadelphia Fed said on its Web site.

In the fourth quarter, the U.S. GDP growth forecast was slashed to 0.7 percent growth, from the previous 1.8 percent forecast…

The current survey also forecast the U.S. unemployment rate would be 5.7 percent in the third quarter, above its previous 5.4 percent forecast, then rising to 5.8 percent in the fourth quarter.

“A weaker near-term outlook for the labor market accompanies the outlook for slower output growth,” the Philadelphia Fed said.

From MarketWatch’s Rex Nutting today:

The U.S. economy faces a prolonged period of anemic growth, but that’s no reason to get complacent on inflation, said Dallas Fed President Richard Fisher in an interview with the Dallas Morning News published Tuesday. “I expect that in the second half of this year we will broach zero growth,” he said. Fisher, a voting member of the Federal Open Market Committee who’s been on the losing side on the past five votes on interest rates, said the credit crunch is worse than the S&L crisis of the late 1980s.

Sources:

“Fed Study: Banks Tighten Credit on Households, Businesses”
Night Editor
Wall Street Journal (Real Time Economics Blog), August 11, 2008

“UPDATE 1-US economy seen slowing more sharply-Philly Fed”
John Parry
Reuters, August 12, 2008

“Fed’s Fisher expects close to zero growth this year”
Rex Nutting
MarketWatch, August 12, 2008

Survey: 91 Percent Of Real Estate Appraisers Asked To Inflate Home Values

Here’s some disturbing information related to U.S. home prices that I came across this past Sunday. The Chicago Tribune’s Mary Umberger wrote:

When economic historians begin their postmortems on the housing bubble, they’ll zero in on nuggets such as:

A vast majority (91 percent) of real-estate appraisers say they’ve been asked to inflate the value of a home, according to ValuFinders Inc., a California firm that provides software for the housing industry.

The ValuFinders survey also reported that 81 percent of appraisers said they feared losing repeat business if they didn’t provide valuations in line with those from the requester.

Question is, how many appraisers actually followed through on these requests?

Source:

“Assessing the wages of a downturn”
Mary Umberger
Chicago Tribune, June 1, 2008

State Governments Battered By Slowing Economy

Earlier today, Bloomberg’s William Selway reported that state governments are projecting a $26 billion shortfall in the next budget year as the slowing economy erodes tax receipts, according to a national survey. The National Conference of State Legislatures study found:

With a few exceptions, state finances are deteriorating, in some cases considerably…

If the national economy continues to struggle and indeed falls into recession, the state fiscal situation will worsen.

While economists argue over whether or not the U.S. economy is in a recession, the group said:

Whether or not the national economy is in recession — a subject of ongoing debate — is almost beside the point for some states because their fiscal situations have declined so much that they appear to be in recession.

According to the survey, deficits are forecast in 23 states for the 2009 budget year. 16 states, including California and Florida, were forced to deal with shortfalls of $11.7 billion that appeared after their spending plans were already set. 33 states say they are concerned about the outlook for the coming year. Not surprisingly, states that benefited most from the housing boom are now seeing the most pain. The widest deficits for next year, measured as a percentage of the budget, are in Arizona, Nevada, California, Alabama, and Florida.

And how do the states plan to deal with the budget shortfalls? Selway wrote:

At least 16 states will respond to their shortfalls by cutting back spending, according to the report. At least eight, including California, are considering moves to raise taxes or fees. Massachusetts is considering a $1 per pack increase in the cigarette tax to raise $175 million, the report said. New York lawmakers balanced next year’s budget in part with a $1.25 per pack cigarette tax boost.

Others are looking at selling assets or using bonds sales to pay for projects. Illinois may sell its lottery, while Maine is looking at selling surplus land. Nevada is considering using bonds, instead of general fund money, for capital works.

More “pole taxes” to come?

Source:

“U.S. States ‘Deteriorating’ as Slump Curbs Taxes, Lawmakers Say”
William Selway
Bloomberg, April 25, 2008

WSJ Sees Continued Downward Pressure On Housing

Earlier today, the Wall Street Journal released a great interactive chart entitled “Where Housing Is Heading.” It is the result of the Journal’s quarterly survey of housing market conditions in 28 major metropolitan areas. They concluded that we will see continued downward pressure on home prices across most of the United States.

So much for a housing bottom…

Source:

“Where Housing Is Headed”
Wall Street Journal, April 24, 2008

WSJ Survey: U.S. Economy In Recession, Further To Fall

The Wall Street Journal’s Phil Izzo talked about the latest Journal forecasting survey of 55 economists. Izzo wrote:

The weakening U.S. economy has further to fall, according to the majority of economists in the latest Wall Street Journal forecasting survey.

By a 3-to-1 margin, respondents said the economy is in a recession, and almost three quarters said the economy hasn’t yet hit bottom.

Highlights from the survey included:

• Fed Chairman Ben Bernanke’s approval rating rose slightly to 78 out of 100 from a 75 in February, which was the last time the question was asked.
• U.S. Treasury Secretary Henry Paulson’s rating fell a point to 73 from 74 in February.
• When asked what the biggest downside risk was to their forecasts, 35% of the economists said it was further deterioration in the credit markets, 25% said it was a sharp drop-off in consumer spending, and 13% said it was continued housing weakness.
• The survey group expects the economy to shed 1,625 jobs a month, on average, over the next year.
• They unemployment rate, now 5.1%, is expected to rise to 5.6% by December.
• Just 21% of economists predict home prices will reach a bottom this year. 67% see the bottom in 2009, and 12% say it won’t be until 2010.
• While most of those polled say the U.S. economy hasn’t hit a bottom yet, they expect gross domestic product to expand, on average, by 0.2% in the first quarter and 0.1% in the second, followed by a 2.1% increase in the third quarter.
• The group expects the Federal Reserve to cut its benchmark federal funds rate by another half-percentage point by June, then keep rates unchanged for the remainder of 2008.

Source:

“Economy Has Further to Fall, According to Economists’ Survey”
Phil Izzo
Wall Street Journal, April 10, 2008

Latest Reuters/Zogby Poll Shows Americans In Foul Mood

According to Reuters/Zogby poll results released earlier today, the Reuters/Zogby Index, which measures the mood of the country, fell sharply from 99.3 last month to 87.7, which is the lowest level since its inception last July. A score above 100 indicates the public mood has improved since July (the benchmark). A score below 100 (like this one) means the mood has gotten worse. Pollster John Zogby told Reuters’ Steve Holland that it was the first time all 10 of the measures used in the poll to take the temperature of the country were down. Zobgy said:

The index is not simply down, it’s down dramatically. It’s the largest move we’ve seen since we inaugurated this.

President Bush’s approval rating fell from 34% last month to 32%. Congress is just as unpopular, falling from 17% in February to 15.5%. Uh oh. With these kind of numbers, look out for some wacky initiatives coming out of Washington as policymakers pander to the masses in this important election year.

Other results from the survey of 1,004 likely voters conducted on March 13 and 14 include:

• Only 19% of those surveyed believe the United States is headed in the right direction.
• Only 40% felt very secure about their jobs (down from 50% in February).

Holland added that in a different Reuters/Zogby poll, nearly three in four Americans thought the U.S. economy was in a recession.

Source:

“Americans in sour mood over economy: Reuters poll”
Steve Holland
Reuters, March 19, 2008

The Great American Con

In the early days of Boom2Bust.com, the amount of material I encountered on a daily basis which was pertinent to the blog’s focus (educating/warning about a coming U.S. financial crash) was more than manageable. In fact, there were days when a lot of the material that came across my desk was way too Pollyannaish (being absurdly optimistic and good-hearted, believing in a good world where everything works out for the best all the time) instead of being realistic. My how things have changed. Now, I’m backlogged with bad news. And it seems that everywhere I look, Americans are changing their tune on the economy:

• Results from a USA Today/Gallup Poll of 1,025 American adults released today show 76% think we are in a recession.
• Results from a CNN/Opinion Research Corporation poll of 1,000 American adults released Monday show 74% believe the United States is now in a recession.
• A poll of 51 economists published last Thursday by the Wall Street Journal show 71% believe the economy is in recession.

Just this morning, U.S. Treasury Secretary Henry Paulson told NBC’s “Today Show” that:

We know we’re in a sharp downclimb and there’s no doubt that the American people know that the economy has turned down sharply. So to me, much less important is the label that’s placed on it today. Much more important is what we do about it.

It appears the three bears are getting the better of the “Goldilocks” economy. In fact, all this negativity reminds me of that movie “Kelly’s Heroes” and the exchange between the characters Oddball (Donald Sutherland) and Moriarty (Gavin MacLeod):

ODDBALL: Why don’t you knock it off with them negative waves? Why don’t you dig how beautiful it is out here? Why don’t you say something righteous and hopeful for a change?
MORIARTY: Crap!

While many would attribute the “negative waves” to a downturn in the business cycle, I read a brilliant piece this morning by Larry Elliott, economics editor for The Guardian (UK), which offered an alternative explanation for our economic woes. One, which Elliott argued, is rooted in the centuries-old conflict between the “haves” and “have-nots.” Yesterday he wrote:

But if you are at the top of the tree, the years since the last recession in 2001 has been a veritable golden age. Salaries for executives have rocketed and profits have soared, because the productivity gains from a growing economy have been disproportionately skewed towards capital…

For ordinary Americans, though, it has been a different story. Real wages have been growing slowly; at just 1.6% a year on average over the latest upswing, well down on the experience of earlier decades. Business, of course, needs consumers to carry on spending in order to make money, so a way had to be found to persuade households to do their patriotic duty. The method chosen was simple. Whip up a colossal housing bubble, convince consumers that it makes sense to borrow money against the rising value of their homes to supplement their meagre real wage growth and watch the profits roll in.

As they did - for a while. Now it’s payback time and the mood could get very ugly. Americans, to put it bluntly, have been conned. They have been duped by a bunch of serpent-tongued hucksters who packed up the wagon and made it across the county line before a lynch mob could be formed.

“See ya, wouldn’t want to be ya…”

Responding to those in the Pollyanna camp who still believe a recession can be averted, Elliott said:

The debate now is not about whether the US is in recession but how deep and long that recession will be. Super-bears have started to say that this is perhaps “The Big One”, by which they mean the onset of a new Great Depression. The need to rescue Bear Stearns has done little to still those voices.

As the economics team at HSBC recently pointed out, there has been a “catastrophic breakdown” of trust, and when that has happened in the past - the US in the 1930s, Japan in the 1990s - chucking extra money at the banks in the hope that they will start lending again proves ineffective.

Sources:

“Poll finds broad pessimism over economy”
JoAnne Allen
Reuters, March 18, 2008

“Three out of four say it’s a recession – survey”
David Goldman
CNN Money, March 17, 2008

“Paulson: We’re in A Sharp Economic Downturn”
Associated Press, March 18, 2008

“America was conned - who will pay?”
Larry Elliott
The Guardian (UK), March 17, 2008

Consumer Sentiment: Half-Full Or Half-Empty?

One event. Two different interpretations. Is consumer sentiment improving, or getting worse? I’ll let you decide…

“US late Feb Reuters/Michigan consumer sentiment rises to 70.8 UPDATE”
Forbes, February 29, 2008

Consumer sentiment, as measured by the Reuters/University of Michigan index, rose more than expected to 70.8 in late February from a reading of 69.6 in early February.

Economists polled by Thomson’s IFR Markets had expected sentiment to rise slightly to 70.0 in late February…

Source: Sur La Table

“Consumer Sentiment Drops to 16-Year Low in February”
Reuters, February 29, 2008

U.S. consumer sentiment dropped to a 16-year low in February, hitting levels that usually sound the alarm bells of recession, on worries about declining incomes and rising unemployment, a survey showed Friday.

Adding to the grim view, consumers’ expectations for the future also hit a 16-year low while worries about their ability to makes ends meet and the overall economy were as bad as they have been in decades, the Reuters/University of Michigan Surveys of Consumers said.

The Reuters/University of Michigan Surveys of Consumers said its main index of consumer sentiment fell to a 16-year low of 70.8 in February from 78.4 in January.

This was the final reading for February and was the lowest since February 1992. It was up slightly from the preliminary February result reported earlier in the month of 69.6, which also would have been the lowest reading since February 1992.

“Consumer confidence remained at the same low level that was recorded during the recession periods of the mid-1970s, the early 1980s and the early 1990s,” the Reuters/University of Michigan Surveys of Consumers said in a statement.

“The minuscule gain from the mid-month reading did not alter the basic fact that the extent of the recent decline has consistently been associated with a subsequent recession period,” it added…

New Poll: More Than Half Of Americans Expect Recession

Earlier today, a Reuters/Zogby poll showed that a majority of Americans expect a recession in the next year in light of the housing slump, growing inflation, and tightening credit conditions. The survey of 1,105 likely voters found that 54% of respondents thought a recession was looming. According to Emily Kaiser in “Majority of Americans expect a recession: poll,” it was the first time since the recession question was added to the monthly poll in September that more than half predicted such a downturn.

“Can you say hell in a handbasket?”

Economic worries have now replaced the war in Iraq as the top issue in this year’s U.S. presidential election as the housing bust takes a toll on Americans, said Kaiser. Three out of four Americans expected home prices will hold steady or fall in the next year. The poll, conducted between January 13 and 16, found that less than 40% of those surveyed thought the U.S. economy would be able to avoid a recession. The Reuters reporter noted:

Those nearing retirement age were particularly concerned about recession. Among those ages 50 to 64, 61.2 percent expected a recession, making them the most pessimistic group.

That group includes a large portion of the Baby Boomer generation born in the nearly two decades after the Second World War. Much of their savings is tied up in home equity and stock-based retirement plans, both of which have been under pressure in the past year.

Pollster John Zogby, himself a Boomer, said older boomers were increasingly delaying retirement or cutting back spending for fear of outliving their savings. Zogby said:

We began as an anxiety-ridden generation and that’s how we’re going to punch the time clock, too.

The poll had a margin of error of plus or minus 3 percentage points.

A Nation Of Idiots?

Consider the one in five American adults who, according to the National Science Foundation, thinks the sun revolves around the Earth…

-Susan Jacoby, “The Dumbing of America”

On the heels of last Friday’s post, I happened to read an article last night from the Washington Post entitled “The Dumbing of America.” On Sunday, Susan Jacoby, author of The Age Of American Unreason, wrote:

Americans are in serious intellectual trouble — in danger of losing our hard-won cultural capital to a virulent mixture of anti-intellectualism, anti-rationalism and low expectations…

Dumbness, to paraphrase the late senator Daniel Patrick Moynihan, has been steadily defined downward for several decades, by a combination of heretofore irresistible forces. These include the triumph of video culture over print culture (and by video, I mean every form of digital media, as well as older electronic ones); a disjunction between Americans’ rising level of formal education and their shaky grasp of basic geography, science and history; and the fusion of anti-rationalism with anti-intellectualism.

An independent scholar who focuses on American intellectual history, Jacoby said first and foremost among the vectors of the new anti-intellectualism is video, accompanied by a decline in book, newspaper, and magazine reading. She cites a report from the National Endowment for the Arts last year which showed:

• In 1982, 82% of college graduates read novels or poems for pleasure. By 2002, this had shrunk to 67%.
• More than 40% of Americans under 44 did not read a single book (fiction or nonfiction) over the course of a year.
• The proportion of 17-year-olds who read nothing (outside of school assignments) more than doubled between 1984 and 2004. She noted that this same time period encompassed the rise of personal computers, Internet surfing, and video games.

Some could argue that the tremendous amount of information made available through new technologies compensates for the decline in reading print material. However, the former Washington Post reporter claimed that the manner in which this information is presented erodes our attention spans. Video consumers, she said, are becoming progressively more impatient with the process of acquiring information through written language. And, according to Jacoby:

…the inability to concentrate for long periods of time — as distinct from brief reading hits for information on the Web — seems to me intimately related to the inability of the public to remember even recent news events.

The author linked the shrinking public attention span fostered by video to what she claimed is the second important anti-intellectual force in American culture: the erosion of general knowledge. She cited a 2006 National Geographic-Roper survey which showed:

• Nearly half of Americans between ages 18 and 24 don’t think that it’s necessary to know the location of other countries in which important news is being made.
• More than a third consider it “not at all important” to know a foreign language.
• Only 14% consider it “very important” to know another language.

Source: HousingPANIC

Ms. Jacoby said that the third and final factor behind the “new American dumbness” is not a lack of knowledge, but arrogance about that lack of knowledge. Jacoby explained:

The problem is not just the things we do not know (consider the one in five American adults who, according to the National Science Foundation, thinks the sun revolves around the Earth); it’s the alarming number of Americans who have smugly concluded that they do not need to know such things in the first place. Call this anti-rationalism — a syndrome that is particularly dangerous to our public institutions and discourse. Not knowing a foreign language or the location of an important country is a manifestation of ignorance; denying that such knowledge matters is pure anti-rationalism. The toxic brew of anti-rationalism and ignorance hurts discussions of U.S. public policy on topics from health care to taxation.

Ms. Jacoby sadly concluded that, “There is no quick cure for this epidemic of arrogant anti-rationalism and anti-intellectualism… It is past time for a serious national discussion about whether, as a nation, we truly value intellect and rationality.”

Can Boomers Save The U.S. From Recession?

As the United States teeters on the brink of recession, some wonder if the Baby Boomers can rescue us through their propensity to spend. A Reuters piece that appeared in the New Zealand Herald on February 8 tried to answer this question. According to Reuters:

Retirement is fast approaching for many of the 76 million-strong generation born in the nearly two decades following World War II. The oldest members of that group turn 62 this year, which is the earliest age to collect Social Security retirement benefits.

Much of their savings are tied up in home equity and sharemarket investments, both of which are now under pressure as the housing and financial sectors stumble. The housing slump and subsequent credit contraction have already taken a toll on US spending and employment, leading many economists to conclude that a recession is close at hand.

David Rosenberg, an economist with Merrill Lynch in New York, told Reuters:

In the early 1980s, early 1990s and the last recession in 2001, as rough as it was for the economy, the boomer could still be relied upon to put a floor under the consumer.

A powerful spending force for the past three decades, the Baby Boomers boast about $3 trillion in annual income, according to the AARP. On the flipside, Reuters claims they have been a big reason for the miserable U.S. savings rate of close to zero, as they took advantage of housing and investment wealth to fund their lifestyles. As this wealth shrinks, Boomers may cut back on spending to rebuild their nest eggs. There is evidence to support this scenario. According to Reuters:

After the technology bubble burst, leading to the 2001 recession, AARP surveyed investors aged 50 to 70 on how they were coping with the sharemarket slide. More than three-quarters of those polled said they had lost money in stocks, mutual funds or other investment accounts. Of those, two-thirds said they had adjusted their lifestyle as a result, including budgeting more carefully, taking fewer holidays and putting off major purchases.

As a result, Rosenberg, Merrill Lynch’s North American economist, now expects the worst consumer recession since 1980 as the Boomers cut back on spending.

The fact that the generation’s youngest members are still in their 40s (which puts them in the peak of their spending years) offers some hope. However, roughly two-thirds of the Boomers are 50 or older.

While recent stock market losses are nowhere near as bad as they were earlier this decade, the housing market is another story. Dean Baker, economist and co-director for the Center for Economic and Policy Research in Washington, D.C., said the present situation in housing is far worse, and more worrisome as homes account for a heftier chunk of savings. Baker explained:

We’re talking about a massive loss of wealth. Prices are just plummeting. You have someone who’s in their 50s, maybe even 60s, and they’re counting on the equity in their home to be a major source of their wealth in retirement. They just saw their home price fall 15 per cent. They’re in real trouble.

Yet, a Reuters/Zogby poll conducted in mid-January still found Americans aged 50 to 64 felt “pretty good” about their financial situation. Nearly 60% rated their financial situation “good” or “excellent,” making them more optimistic than the overall population. The reality is, older workers are “particularly vulnerable” in downturns. According to the article:

Baker says worries about job security and paying for retirement may prompt boomers to pocket rather than spend any rebates they receive as part of a stimulus package of some US$150 billion moving its way through Congress. “If people do end up saving it, obviously it doesn’t provide very much stimulus,” he says.

In another blow to Boomer wealth, on February 5 MarketWatch reported that the vast amount of wealth that was to be transferred between the “greatest generation” and the Baby Boomers is now looking to be a bust. Thomas Kostigen wrote that the $17 trillion that is supposed to change hands in the next 20 years may be far less due to longer life expectancies, increased medical costs, and estate taxes. According to a new Consumer Wealth research report by Tiburon Strategic Advisors:

The World War II generation wealth transfer has been less impressive than many predicted, and it likely will not grow much further…

The median value of a baby boomer’s inheritance is $48,000; very few have received more than $100,000. Specifically, only 2% of those baby boomers who received an inheritance received more than $100,000. Furthermore, the coming wealth transfer faces several limiting factors, including immediate spending, longer time in retirement, health-care costs, taxes and wealth concentration.