WASHINGTON — People are skittish about the economy’s immediate future. Ask how things will be in a year and you hear a different story — and a remarkable show of optimism despite economists’ widespread expectations that a serious recession is brewing.
Most expect the economy to generally be better and the stock market to be rising three months from now, according to an Associated Press-GfK poll released Thursday. But that’s mixed with gloom: Majorities also doubt unemployment will fall or home values will rise by then, and people are split over whether their personal finances will improve.
Extend the timeline to a year and the public’s mood about the economy grows cheerier. Most say they expect more jobs and higher real estate value. They also think their own financial situations will be better a year from now, the survey shows.
“A few months from now, I don’t see it,” said Claudette Davis, 61, a retired power company supervisor from Alpharetta, Ga. “A year from now, it may improve. With the $700 billion to bail out all those banks, maybe things will come around. And maybe the new president will have some input.”
That optimism seems to run counter to the beliefs of many economists that the U.S. is in, or about to enter, a recession. Democrats in Congress are looking at crafting the year’s second economic stimulus bill, an idea that’s been embraced by Federal Reserve Chairman Ben Bernanke and that the White House has said President Bush would consider.
Many said the upcoming presidential election will affect the economy’s performance. Forty-four percent said they think the economy will improve if Democrat Barack Obama is elected, while 34 percent said it would get better if Republican John McCain wins.
With widespread economic worries making the stock market lurch wildly almost daily, most in the survey were eager to keep their distance from it. By a 58 percent to 38 percent majority, people said this was a bad time to invest in stocks. However, by a more modest 53 percent to 43 percent, most said this is a good time to buy real estate.
“The stock market is obvious, it’s probably not bottomed out,” said attorney Anthony Venditti, 41, of West Chester, Pa. But assuming a person can get a loan — no easy feat these days — “It’s a great time to buy a house. There’s a huge inventory out there.”
About three quarters of active investors — people who changed their investment mix at least five times in the past year — said this is a good time to purchase real estate and invest in the stock market. Two-thirds of people earning at least $100,000 a year also said so. But fewer than half of those making under $50,000 said now’s the time to be buying stocks or property.
People were asked how they think seven aspects of the economy would be behaving in three months and a year from now. They gave mixed responses for the near-term, but in nearly each case foresaw stronger performance in a year.
Steven Wood, 30, a car salesman from Canton, Ga., said he doesn’t doubt that the economy will rebound. “I deal with customers every day, and as a whole, even though people are down about the economy, they’re very optimistic about what the future holds,” he said.
Just 38 percent said they think unemployment would go down in three months, but 62 percent said they thought it would improve in a year. That is counter to what many analysts expect: Unemployment is 6.1 percent nationally, and economists predict it could go as high as 7.5 percent in 2009.
“Every company has a hiring freeze. It’s not going to change in three months,” said Yasmine Black, an account representative from New York City. “In a year maybe, perhaps.”
Four in 10 people making less than $50,000 a year said unemployment won’t fall in three months or a year, making them less optimistic than the highest earners.
In other instances of growing public optimism, the poll found:
- While 53 percent said the economy would be better in three months, 75 percent said it would improve in a year.
- Only 31 percent said they expect their home’s value to be higher in three months; 55 percent said it should be better in a year.
- People were divided evenly over whether their personal finances would improve in three months, while two-thirds expected things to be better in a year.
- While 58 percent foresee a higher stock market in three months, 77 percent predict a stronger market in a year.
Blacks were a bit more optimistic than whites in the survey that home prices will rise in the short and long term, and that the economy will improve in a year.
Reflecting gasoline prices that have dropped to $3 or less per gallon, two-thirds expect even lower gas costs in three months. Fewer said they will still be sinking in a year.
Most don’t see a drop in other prices. Three in 10 expect the costs of everyday stuff to be lower in three months; that figure grows to four in 10 in a year.
“I’ve been around 41 years and I’ve never seen the price of milk go down,” said Venditti.
The AP-GfK poll involved landline and cell phone interviews with 1,101 randomly chosen adults and was conducted from Oct. 16-20. The margin of sampling error is plus or minus 3 percentage points, larger for subgroups.
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