More See a Nation in Recession, but Most Feel Financially Secure

More Americans have grown pessimistic about the U.S. economy since the Sept. 11 terrorist attacks, but most express confidence in their own finances and in the nation’s long-term economic health, according to a Los Angeles Times Poll.

The poll found that 73% of Americans believe the nation is in a recession--a 22-point jump from mid-September. And those who think the downturn will be deep and long nearly doubled over the last month to 17%.

Even so, an overwhelming majority of Americans surveyed say their own finances are secure, and that they expect to have at least the same amount of money to spend next year.

Likewise, 71% think the terrorist attacks will do no lasting damage to the nation’s economy. Three-quarters believe the stock market will do well over the next year.

Two of five Americans, however, said they plan to cut spending in the near term, particularly on big-ticket items, despite encouragement from political and business leaders to go out and shop.

Public sentiment may have a significant bearing on how quickly and strongly the economy recovers over the next year, given that consumer spending accounts for two-thirds of the nation’s economic activity.

“Everyone I know is squirreling money away,” said poll respondent Kathy Chamberlain, an Omaha computer programmer, in a follow-up interview. Recently her work hours were cut in half. “People are just sitting tight because things are so uncertain right now,” she said.

The Times Poll, a telephone survey of 1,995 Americans nationwide taken Nov. 10 to 13, found that 58% of those interviewed said they think the national economy will be in the same shape or worse six months from now.

As recently as Sept. 13 and 14, only 51% of those surveyed thought the country was in recession, compared with nearly three-quarters now. Only 9% of those polled in mid-September characterized the economic slowdown as a “serious recession,” about half the percentage who said so this week.

The latest numbers reflect the spreading fallout from the Sept. 11 disasters, which hastened an economic decline that started in manufacturing and technology and has since infected the broader economy. Sharp contractions in industries such as airlines and tourism led to the loss of 415,000 jobs in the U.S. in October, the biggest monthly surge in layoffs in 21 years. Though the nation’s 5.4% jobless rate remains historically low, the latest round of mass layoffs has rattled some Americans, who worry about the ripple effect on their own livelihoods.

Susan Pinkus, director of The Times Poll, said Americans’ view of the economy clearly has become more pessimistic in recent weeks. She said even people who haven’t directly been hit with a layoff or pay cut know someone who has. Many are leery of growing weakness that has left few industries untouched.

Even encouraging news about the war in Afghanistan and a rebounding stock market haven’t assuaged respondents’ immediate fears about the economy. Still, Pinkus said, the findings reflect an underlying long-term confidence in America’s prospects.

Indeed, there were several bright spots in the latest poll, which has a margin of sampling error of plus or minus 3 percentage points:

* 75% of those surveyed described their personal finances as “fairly secure” or “very secure.”

* 74% said neither they nor anyone else in their household had been laid off, had their hours reduced or otherwise seen their paychecks shrink in the last 12 months.

* 75% said they will have at least as much money to spend next year as they did this year.

Still, though Americans expressed confidence in the economy’s long-term prospects, many say they are hunkering down for the short term.

Despite falling interest rates, only 9% of those surveyed said they’ll increase their debt over the coming year, and 46% said they intend to whittle down their outstanding debt.

Meanwhile, 41% said the recent economic downturn has caused them to reduce, postpone or cancel a purchase such as a house, a car, an appliance or a vacation.

Now that her hours have been cut back, Chamberlain, the Omaha computer programmer, said she and her husband have reduced their spending “to the bare bones.” Their vacation, if they take one at all next year, is more likely to be driving to Milwaukee than a trip like the Scandinavian holiday they took over the summer.

“I don’t know how long it will be before we do that again,” said Chamberlain, 46. “I just don’t see a fast recovery.”

Americans in households with income of less than $20,000 were the most likely of any income group to report that they or someone in their household had been fired, had their work hours slashed or otherwise seen their pay cut over the last year.

Nearly half of households with income below $20,000 told pollsters that their personal finances were either “fairly shaky” or “very shaky,” compared with just 13% of those with income of $60,000 or more.

Their financial struggles appear to have colored their views about the American economy. Among respondents with household income of less than $20,000, 25% think the nation’s economy will be performing worse six months from now, compared with 16% overall.

But Americans such as Nancy Thurman figure everything will turn out all right. A retired high school teacher from Houston, Thurman said the events of Sept. 11 haven’t affected her economic behavior one bit.

She just spent $1,200 on a new stove after repairs on her old one didn’t take.

“President Bush told us to go out and spend money, so that’s what I did,” the 67-year-old said, chuckling.

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Jill Darling Richardson, associate director of The Times Poll, contributed to this report.