Most Americans think a recession is coming

Posted Oct 25th 2007 7:32AM by Jonathan Berr
Filed under: Consumer Experience, Apple Inc (AAPL), Economic Data, Federal Reserve

Are people on Wall Street and Main Street living in the same economy? Sometimes it's tough to tell.

A whopping 65% of Americans now believe that a recession is coming in the next year and 51% believe the economy is doing poorly, according to a Bloomberg/Los Angeles Times survey. Wall Street executives predicted a 37% chance of a recession, according to a Financial Services Forum survey released last week by the Financial Services Forum.

The differences aren't shocking. When average folks look at the chart of the Dow Jones industrial average, they probably think it looks like an EKG of someone who is having a heart attack. The market moves up and down in triple-digit increments with an alarming regularity. The housing market is horrible. Many people aren't sure if their job will be the next to be shifted overseas to a low-cost country.

Veteran investor Jim Rogers recently told London's Telegraph that the U.S. economy is "undoubtedly in recession. Many parts of industry are actually in a state worse than recession. If it were not for (Federal Reserve Chairman Ben) Bernanke putting huge amounts of money into the market, the stock market would probably be down much more."

Of course, Rogers is correct. The lowered interest rates gave the stock market a needed confidence booster, which may explain the optimism of the Financial Services Forum survey. Retail sales in September rose at a higher-than-expected rate. Consumers, at least some of them anyway, continue to spend. Apple Inc. (NASDAQ: APPL) reported outstanding results, showing that people are confident enough to shell out big bucks for iPhones and iPods.

So, the question for the Federal Reserve and Chairman Ben Bernanke at next week's meeting is whether the glass is half-full or half-empty.

Tags: appl, consumer confidence, consumer spending, ConsumerConfidence, ConsumerSpending, economy, Federal Reserve, FederalReserve, inthenews, retail sales, RetailSales, survey, The Fed, TheFed

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Reader Comments (Page 1 of 1)

10-25-2007 @ 10:17AM

BizIntel said...

The difference is interesting, especially given that the Wall Street Journal's October Economic survey shows the expected probability of recession fell from 36% in September to 34% in October. This suggests Wall Street is becoming increasingly more optimistic. But then again, we have been riding the Bull market for some time now...maybe we are getting a bit complacent.

Cheers,

BizIntel

http://www.evaluatingstocks.com

10-25-2007 @ 9:31AM

michael schneider said...

My sense is the average person is more likely to fear recession and hence worry about it and think it is on the way when things are bad or slowing than an armchair economist. The bubble era of the 1990s was an exception when everyone got to giddy. It might be good if the average person would increase their savings and pay down some debt in response to their fears. Jim Rogers does not make that many mistakes in his views but when he does it often stems from his being too pessimistic on the US economy though he is certainly correct in seeing the weakening of some foundations of the economic structure from the huge debt levels and balance of trade imbalance. Many items on and about legendary investor Jim Rogers, including a synopsis of the article cited above, are available free in the Channeling Jim Rogers section (yellow label, top) at http://www.Barrelomoney.com.