As War’s Glow Fades, Most Say U.S. Is in Slump

As the afterglow of the U.S. victory in the Persian Gulf fades to more mundane concerns, eight out of 10 Americans still believe the national economy is mired in recession, although some previously pessimistic consumers are stepping up buying plans for the near future, according to The Times Poll.

The national survey, conducted April 6 to 9, underscores the cross-currents affecting the U.S. economy at a time when some forecasts have pointed to a sharp increase in consumer confidence about the future.

Majorities in all regions of the country and among all income groups agreed the nation was still in a recession. One in four described the recession as mild; one in three termed it moderate and one in five described the slump as serious.

Despite the gloomy assessment, those surveyed were more sanguine about their personal finances. Nearly seven out of 10 described their own financial situation as secure.

While the poll found some potentially favorable trends, it gave little evidence that postwar euphoria would translate to boom times quickly. Almost three out of four described the U.S. economy as “shaky,” and more people said that unemployment would worsen in their area than said it would improve.

At the same time, certain groups are planning to go ahead with delayed spending plans. Take the three in 10 who said they had postponed a major purchase within the last few months; of this group, about half said they would go forward and make the purchase within the next few months.

“We are still getting a very mixed message on the economy,” said John Brennan, director of The Times Poll.

When people were asked what they would do with a $1,000 windfall, 39% said they would use it to pay bills, 42% said they would deposit it in their savings and just 18% said they would use the money to buy things.

“I don’t believe that a consumer-led rebound is imminent--absolutely not,” said Sandra Shaber, an economist with the Futures Group, a consulting firm in Washington. But, she added: “The worst is over.”

Despite doubts on the economy, Americans strongly support President Bush’s overall leadership. His approval rating is a lofty 82%, virtually unchanged from 84% in a Times poll in March. And despite public unease about recent events in the Middle East, six out of 10 agree that the President is “doing just what he should be doing” to help Iraq’s rebels fight Saddam Hussein. Just 29% think he should be doing more.

Overall, Americans continue to award the President higher grades on his handling of foreign affairs than matters at home. Eight out of 10 approve of his leadership on international issues, while just over half support his handling of domestic matters.

On the crucial question of how the President has handled the economy, just 49% approve and 44% disapprove.

“A lot of people who say we’re in a recession basically still approve of the job the President is doing,” Brennan said.

Concerns about the state of the economy were widespread, although they varied in severity.

Residents of the East were a bit more likely than people elsewhere to describe it as shaky; Southerners a tad more likely to describe it as robust. Residents of the West and Midwest came out somewhere in between.

In a graphic measure of the recession’s reach, 34% said that they or a household member had suffered some cutback at work within the last year--ranging from being laid off to accepting a lower-paid position to having overtime hours reduced. Among that group, 12% cited a firing or job elimination, 9% pointed to a cutback in working hours and 5% cited a temporary layoff.

With Operation Desert Storm fading into history, such realities could play a crucial role in shaping consumer sentiment in the coming months, economists say. After the Gulf War ended, some opinion surveys detected an extraordinary leap in public confidence about the future.

But, according to some experts, continued bleak news on the economy, such as last week’s Labor Department report of rising unemployment, threatens to erode some of the enthusiasm.

“Some of that euphoria may well evaporate in the face of what I think are the harsh realities of economic life right now,” said Norman Robertson, chief economist at Mellon Bank in Pittsburgh, Pa.

Such realities are experienced differently among various subgroups of the U.S. population, according to the poll.

While 63% of whites surveyed said it was easy to meet their household expenses these days, just 36% of Latinos and 50% of blacks responded that it was painless to pay the bills. Similarly, about half of whites surveyed said it was easy to handle their loan payments, but the figure was just 32% for Latinos and 42% for blacks.

Despite the recession, seven out of 10 whites rated their personal finances as secure, but only about half of Latinos and blacks described their household budgets so favorably.

The Times’ national poll surveyed 1,761 adult Americans by telephone. The survey has a margin of error of plus or minus three percentage points. The margin of error is somewhat higher for percentages based on certain subgroups.

Overall, those surveyed seem to be taking a cautious, conservative approach to personal spending, an apparent departure from the heady 1980s when the public took on record levels of debt in an unprecedented shopping spree.

Reflecting such attitudes, perhaps, almost a third predicted they would have less debt in a few months than today. Over half expected their household debt levels to stay the same and just 12% expected them to go up.

The findings correspond with a recent national trend, in which household debt levels have declined for three months, according to Federal Reserve statistics. “It means that people are worried about their finances,” Shaber said. “They’re going to cut back on the big-ticket items, and they’re going to cut back on what they owe.”

In addition, two out of three overall said they expect to be spending about the same amount of money three months from now as today. Of the remainder, however, a majority anticipated increases in spending, a potential gain for the economy.

“It’s not indicating there will be a world-record boom,” said Jason D. Bram, an economist at the Conference Board in New York, of the predicted rise in consumer purchases. “But spending increases even of 1% to 2% have got to be a very big plus for the prospects of recovery.”

Recent surveys by the Conference Board, a business research organization, and the University of Michigan detected striking increases in consumer expectations for the future. These findings, propelled by the end of the war, led some analysts to predict a rapid end to the recession.

HOW THE POLL WAS CONDUCTED

The Los Angeles Times Poll interviewed 1,761 adult Americans nationwide by telephone from April 6-9, 1991. The margin of sampling error for percentages based on the sample is plus or minus 3 points. For percentages based on certain subgroups, the error margin is somewhat higher. The survey is conducted using random digit dialing techniques which ensure that each region is properly represented and that both listed and unlisted residences have an opportunity to be contacted. Results are adjusted to conform with national census figures for characteristics such as sex, race, age, education and household size. An oversampling technique is employed to secure an adequate subsample of Latinos for analysis.

HOW CONSUMERS FORECAST THE ECONOMY

The Los Angeles Times Poll conducted April 6-9 asked 1,761 adults nationwide about their expectations for the economy three months from now. Consumers said they expect . . .

Their personal finances will be:

Better: 29%

Worse: 6%

About the same: 65%

The nation’s economy will be:

Better: 26%

Worse: 20%

About the same: 51%

Don’t know: 3%

On purchases, they will be spending:

More money: 21%

Less money: 14%

About the same: 65%

Their local rate of inflation will be:

Higher: 32%

Lower: 9%

About the same: 56%

Don’t know: 3%

Interest rates on car loans and home mortgages will be:

More favorable: 27%

Less favorable: 20%

About the same: 50%

Don’t know: 3%

Job availability will be:

Better: 25%

Worse: 32%

About the same: 42%

Don’t know: 1%

Personal debt will:

Worsen: 12%

Lessen: 32%

About the same: 56%

Local real estate values will:

Increase: 27%

Decrease: 17%

Not change: 55%

Don’t know: 1%

Say you received an unexpected tax-free gift of $1,000 in cash that you could use for any purpose. How would you use that money?

To pay bills or loans: 39%

For savings and investments: 42%

To buy things: 18%

Don’t know: 1%

Source: Los Angeles Times Poll

HOW CONSUMERS RATE THE ECONOMY Results are based on a national Los Angeles Times Poll of 1,761 adults conducted April 6 to April 9. Comparisons are to earlier Los Angeles Times Polls.

Consumers described the current recession as...:

FEB MAR NOW Mild 28% 29% 25% Moderate 33% 38% 34% Serious 23% 21% 21% No Recession 13% 9% 17% Don’t Know 3% 3% 3%

By region, consumers termed the nation’s economy:

TOTAL EAST MIDWEST SOUTH WEST Robust 25% 19% 26% 31% 25% Shaky 73% 80% 71% 67% 73% Don’t know 2% 1% 3% 2% 2%

By region, consumers termed their personal finances as:

TOTAL EAST MIDWEST SOUTH WEST Secure 68% 66% 70% 71% 65% Shaky 31% 33% 29% 29% 34% Don’t know 1% 1% 1% 0% 1%

By region, consumers were asked whether it is a good time to make major purchases:

TOTAL EAST MIDWEST SOUTH WEST Excellent 7% 7% 9% 5% 5% Good 39% 39% 40% 40% 36 Not so good a time 30% 30% 28% 31% 33% Poor time 19% 20% 18% 20% 20% Don’t know 5% 4% 5% 4% 6%

West includes Alaska and Hawaii Source: Los Angeles Times Poll