Americans feel less confident about their financial status in spite of widely reported gains in the national economy, a new study shows.
The Public Religion Research Institute's 2014 American Values survey reported a majority of Americans now sort themselves into the "fair" (37 percent) or "poor" (20 percent) categories, illustrating that economic pessimism continues regardless of the fact that economists generally cite 2009 as the end of the recession.
"I think this is a lesson in not mistaking macroeconomic reports with a 1-to-1 translation of people's lived experience on the ground," said Robert P. Jones, CEO of PRRI.
The survey found declining numbers of people who rate themselves as being in "excellent" or "good" financial shape. "Today, roughly 4-in-10 Americans say they are currently in excellent (7 percent) or good (34 percent) shape financially," PRRI reported, down 2 and 7 percent, respectively, from 2010.
The study highlighted how financial circumstances varied across generational, racial and ethnic lines, and that black and hispanic Americans experienced financial hardships at the highest rates. Pointing to ongoing dissatisfaction, PRRI researchers predicted that economic policies will emerge as an important aspect of the 2014 midterm elections as voters seek to keep the American dream alive.
The bigger picture
To better understand the factors impacting Americans' assessments of their financial situation, researchers asked respondents about their experiences with a variety of economic insecurity indicators.
More than one-third of respondents (36 percent) said they, or someone in their household, reduced meals or cut back on food, 29 percent were unable to pay a monthly bill or put off seeing a doctor for financial reasons in the past year. Additionally, 27 percent of people were impacted by a job loss or a reduction in hours.
Exposure to the experiences was notably higher among black Americans, 43 percent of whom reported that they or someone in their household had reduced meals, while 34 percent described a postponed doctor visit and 47 percent reported that their household had missed the deadline for a monthly bill.
Pew Research Center reported on similar findings earlier this month, tracking respondents' experiences with delayed medical care, missed rent or mortgage payments, collection agencies, job loss and reduced work hours.
"While no more than a quarter of the public (had) experienced any of the individual financial problems tested in the survey, fully 45 percent of Americans (reported) having experienced at least one in the past year," the Pew report stated.
Henry Olsen, a senior fellow at the Ethics and Public Policy Center, said that such experiences erode consumer confidence, which can impact the national economy. "Consumer confidence has often been related to a willingness to spend," he said. "I think most Americans have been (financially) stagnant for many, many years."
PRRI combined the measures of food, monthly bills, health and job insecurity with data on food stamps and unemployment benefits to create an Economic Insecurity Index. The goal was to provide a "composite picture of economic insecurity" in American households.
The benefit of the new index, explained Jones, was that it allowed researchers to highlight the concrete experiences impacting Americans' estimations of their financial situations.
"Rather than only asking, 'Do you feel stressed or worried about your finances?' we asked some very specific things that are less subjective," he said. Jones found the data on food insecurity particularly compelling, describing it as "key to understanding just how much economic stress Americans are under."
PRRI's Economic Insecurity Index found that "approximately 4-in-10 Americans live in high or moderate economic insecurity households." This figure increased to nearly 6-in-10 for black Americans and around 5-in-10 for Hispanics, the study noted.
Growing cynicism
Declining confidence in personal financial performance and experiences with financial insecurity led to "wavering belief in the American dream," the PRRI report said. Only 42 percent of Americans now believe that hard work leads to expanded opportunities, compared to 53 percent in 2012, 44 percent in 2011 and 50 percent in 2010.
Acknowledging the wide variations from year to year, Jones said the main takeaway is that the idea that Americans can get ahead by working hard no longer enjoys widespread support. The economic dissatisfaction of recent years threatens to change Americans' fundamental understanding of their country, Jones explained.
America has traditionally been understood as a place where "anyone can succeed if he or she works hard and plays by the rules," Jones said. "We're seeing that idea under threat in these numbers."
Although shifts in respondents' understanding of the American dream may not have a direct impact on spending, "it does affect the way people view public policy and their role as citizens," Olsen said.
One bright spot in the survey's "troubling picture of pessimism in the present and a gloomy look toward the future" was that personal financial stress was not shown to create "class resentment," Jones noted.
"Despite the evident concerns about their own financial situations, Americans tend to believe they are in somewhat better shape than their neighbors," the study stated. "Nearly 6-in-10 (58 percent) Americans say they are doing better than most other Americans."
Other takeaways
The 2014 American Values Survey compiled the responses from 4,507 phone interviews conducted between July 21 and Aug. 15, 2014.
Other notable data points from the PRRI report included:
• The age variation in economic assessments. Respondents age 65 and older were much more likely to describe their financial situation as "excellent" or "good" than respondents ages 18 to 29. Nine percent of older Americans said they were in excellent shape and 42 percent in good shape, compared to 6 percent and 30 percent, respectively, of the younger group.
• Shifting class self-identification. Although the percentage of Americans who reported they belonged to the upper or lower class did not change from 2012 to 2014, there was a shift in class self-identification between the middle and working classes. "The percentage of Americans who consider themselves to be middle class decreased by four percentage points, from 41 percent in 2012 to 37 percent in 2014. Meanwhile, the percentage of Americans who self-identify as working class increased by four points, from 34 percent in 2012 to 38 percent in 2014."
• The economy's role in the upcoming election. Economic issues should take center stage during the lead-up to November's midterm elections, surpassing concerns with health care, immigration and national security. "Nearly 4-in-10 (38 percent) Americans say the economy is the most important issue to their vote this year."
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