Posted by: Joe Weber on June 11
While more people are brown-bagging for lunch and plenty are uneasy about whether the Obama Administration can get a handle on the economic crunch, a growing number of Americans expects to see improvement in the economy by year-end. Workers and retirees surveyed for the Principal Group’s nine-year-old Principal Financial Well-Being Index seem to be tilting — however hesitantly — toward an upbeat view of the economy’s prospects.
Expectations that the economy will get worse by the end of this year are clearly diminishing. Only 18% of current workers surveyed believe economic conditions will worsen by the end of 2009, down from 24% in the first quarter of the year. Some 37% expect gains, up from 35% in the opening quarter. Among retirees, 24% expect a worse situation, down from 27% in the earlier period, while 31% expect better, down from 33% earlier.
But skepticism about whether Washington will right the ship runs deep. Only half of the current employees and 49% of retirees felt confident about the Obama Administration’s ability to deal with the crisis. Indeed, on a personal level, 56% of the workers and 60% of the retirees expect to be in about the same financial shape a year from now as a result of the government’s stimulus plan, while only 15% of workers and 10% of retirees believe they’ll be better off.
Harris Interactive ran the survey for the Principal Group, an insurer based in Des Moines, Iowa. Interviewers polled 1,189 workers at small and mid-sized businesses, employing 10-1,000 employees each, and 508 retirees. They were questioned between April 27 and May 6 and results were released on June 9.
The survey provides a trove of information on how the economic crunch has changed behavior. Some 61% of employees and half of retirees say they now prepare more meals at home instead of going out, for instance. Some 31% of the workers have started bringing their lunches to work. And 20% say they are even cutting back on take-out coffee.
And it appears that more people have either built an emergency fund or have stepped up their savings in one. Some 59% of the workers queried now say they have such a fund, up from 56% in the closing quarter of last year, while 67% of retirees do (down from 69%). Some 36% of the workers with such funds say they could cover over six months of living expenses, if need be, up from 30%. Some 66% of retirees could do so, up from 54%. So far, only 11% of each group has had to tap those funds recently.
Many of those questioned expect that, over time, they’ll regain the losses in their retirement funds. Some 41% say it will take two to five years for their accounts to return to the January 2008 level. Some 15% expect six to 10 years. Only 3% figure their funds will never recover.
BusinessWeek’s Joe Weber, Patricia O'Connell, Michelle Conlin, Frederik Balfour, Peter Coy, Greg Spielberg and Roger Crockett examine The Case for Optimism by looking past the financial turmoil and economic unrest gripping the globe to focus on the promising future that lies on the other side of this storm. We’ll chronicle the forward thinkers investing in R&D, launching promising new products, entering new markets, or implementing management and leadership.
See why BusinessWeek Editor-In-Chief Stephen J. Adler is optimistic about the economy amid the sharpest downturn since the Great Depression.