THE FRAGILE ECONOMY : THE TIMES POLL : Confidence Slides Among Consumers : Economy: A growing number now say the country is in a serious slump that won't end soon. Gloom underscores President Bush's political problems.

By JONATHAN PETERSON

July 15, 1992 12 AM PT

TIMES STAFF WRITER

A springtime rally in consumer confidence has petered out amid a barrage of bleak economic news, with growing numbers of Americans now saying the nation is in a serious slump and optimism for a quick upturn is slipping, according to a new Los Angeles Times Poll.

The shift in public sentiment, which underscores President Bush’s political problems and could foreshadow slower levels of consumer spending in the coming months, was apparent when people were asked their predictions for the near future: Just 19% expected an improving economy in the next three months--down from 28% in late March.

Similarly, 42% now say the country is gripped by a serious recession--up from 35% in the spring. Overall, the poll portrays a public that is gloomier about the economy than most professional economists, who generally believe that a fragile recovery is in progress. Of those surveyed, 86% said a slump persists.

The new findings “are consistent with the deterioration in economic activity that we’ve seen over the past two to three months,” said Mark M. Zandi, an economist with Regional Financial Associates in West Chester, Pa. “People are very concerned with their economic situations, and the future looks less bright today than in the spring, when the economy seemed to be accelerating.”

John Brennan, director of The Times Poll, said that the clearest message of the survey is that the public now expects more of the same bad economy--rather than the upturn that was hinted at in the March poll. “We had a little bright news last time, and now that’s gone away,” he said.

The survey of 1,681 adults nationwide was conducted July 7-9. The margin of sampling error is plus or minus three percentage points.

In some cases, people’s responses reflected little change from previous polls. For example, a majority of those questioned--63%--described their own personal finances as generally secure, effectively unchanged since March.

Most of the responses had a more pessimistic flavor, however. Three in four--75%--said that things in the country are “seriously off on the wrong track.” That finding also was equivalent to the March poll. Almost half rated the economy as “bad,”--47%--while 51% described its performance as “in between” and only 1% said it was “good.” These responses were faintly better than those in March, but the small gain fell within the poll’s sampling error.

In other cases, there was a downward shift in people’s attitudes since the spring. Just 19% in the latest survey foresee an improving job market in their area over the next few months, with 27% anticipating a decline. In March, 25% had predicted a better job picture; the same number thought it would worsen.

Gauges of consumer confidence are followed closely by analysts because they are believed to provide advance warning of the economy’s direction. During the first several months of this year, for example, opinion surveys documented steadily improving consumer sentiment; other gauges, meanwhile, pointed to a general strengthening of the economy.

Since June, however, consumer attitudes have shifted and started to slip downhill, a worrisome development for an economy trying to accelerate.

A June survey by the Conference Board, a New York-based business research organization, detected a leveling off of consumer confidence after three months of robust gains. The pattern is reminiscent of last year, when a pickup in the spring of 1991 stalled out, leading to what some analysts have called a second dip into recession that lasted for several months.

“The recovery is hesitant and, certainly from the latest numbers we’ve got, it begins to look fragile,” said Fabian Linden, executive director of the Conference Board’s Consumer Research Center.

The new Times Poll also points to a weaker short-term prognosis for the economy: Just 19% of Americans expect an improvement in the U.S. economy three months from now, while 22% foresee worse conditions on the horizon, and 54% expect no change. The March poll had painted a somewhat more buoyant picture: 28% expected the economy to improve, while 17% said it would get worse, and 52% believed that it would stay the same.

In explaining the latest findings, economists said the public is responding to renewed economic danger signs, especially the job market. In June, the U.S. unemployment rate rose to 7.8%, its highest level in more than eight years and substantially higher than the 7.1% at the start of the year.

Unlike past recoveries--if a recovery indeed has begun--a broad spectrum of American industry has continued to eliminate jobs in a push for efficiency that has made it harder for the unemployed to re-enter the work force and has left millions more workers fearful of losing their jobs.

“Given the weakness in the employment picture, it’s not surprising that confidence levels have begun to erode,” Zandi said.

How the Poll Was Conducted

The Times Poll interviewed 1,681 adult Americans nationwide by telephone on July 7-9. Telephone numbers were chosen from a list of all exchanges in the country. Random-digit dialing techniques were used to ensure that both listed and unlisted numbers had an opportunity to be contacted. Results were weighted slightly to conform with census figures for sex, race, age, education and household size. The margin of sampling error for the total sample is plus or minus 3 percentage points. For certain subgroups, the error margin is somewhat higher. Poll results can also be affected by other factors, such as question wording and the order in which questions are presented.

Poll Finds Gloom Growing After a pick-up in consumer confidence earlier this year, The Times Poll found that consumer sentiment has reversed as more people are growing gloomier about the nation’s economy. The number of people thinking we are in a serious recession increased significantly. Also, the short-term outlook for the economy took a turn for the worse. Do you think we are in an economic recession, or not? If yes, do you think we are in a mild recession, a moderate recession or a serious recession?

July, 1992:

Serious recession: 42%

Moderate recession: 33%

Mild recession: 12%

No recession: 10%

March, 1991:

Serious recession: 21%

Moderate recession: 38%

Mild recession: 29%

No recession: 9%

Three months from now, do you expect the nation’s economy will be better than it is now, worse than now or about the same as now?

July, 1992: