Poll: 60% say depression 'likely'

[Andrew_Pakula]

http://money.cnn.com/2008/10/06/news...poll/index.htm

Poll: 60% say depression 'likely'

Poll finds 6 of 10 believe a depression is somewhat or very likely - seeing 25% unemployed and millions homeless and hungry.

By Chris Isidore, CNNMoney.com senior writer
Last Updated: October 6, 2008: 4:23 PM ET

NEW YORK (CNNMoney.com) -- Nearly six out of ten Americans believe another economic depression is likely, according to a poll released Monday.

The CNN/Opinion Research Corp. poll, which surveyed more than 1,000 Americans over the weekend, cited common measures of the economic pain of the 1930s:

* 25% unemployment rate;
* widespread bank failures; and
* millions of Americans homeless and unable to feed their families.

In response, 21% of those polled say that a depression is very likely and another 38% say it is somewhat likely.

The poll also found that 29% feel a depression is not very likely, while 13% believe it is not likely at all.

But economists, even many who feel current economic risks are dire, generally don't believe another depression is likely.

"We've been in a recession all year and it's going to get worse," said Anirvan Banerji, director of research for the Economic Cycle Research Institute. "We're going from a relatively mild recession to a more painful recession. But we're a long, long way from a depression."

A survey taken last week by the National Association of Business Economists asked members what would happen if the $700 billion bailout that passed Friday fails to fix frozen credit markets. The consensus forecast of those economists was that, even if continued problems choke off credit to businesses and consumers, unemployment would rise to just 7% in the second quarter of next year .

Other economists recently contacted by CNNMoney.com said that the unemployment rate could rise as high as 10% to 12% next year if the bailout does not work. While that could be roughly double the current 6.1% unemployment rate, it would be only half of the worst rate seen in the Great Depression of the 1930s.
What defines a depression?

Banerji's worst-case scenario sees unemployment topping out at just under 10%. That's one of the key reasons that he thinks a true depression is unlikely.

"A depression rate would imply more than doubling or tripling the current unemployment rate," he said.

The Great Depression also saw the gross domestic product, the broad measure of the nation's economic activity, plunge by 13% in 1932.

The NABE survey forecast that GDP will drop 1.1% in the fourth quarter of 2008 if the bailout does not get credit flowing again, and another 0.5% in the first quarter of next year. The economists surveyed by CNNMoney.com said they could foresee a drop of 2% to 4% in a worst-case scenario.

Part of the reason for the far less severe economic pain expected this time are the social safety net programs - including Social Security, unemployment insurance and insurance on bank deposits - that were not in place at the start of the Great Depression.

And experts believe that the Federal Reserve and other officials made many policy mistakes during the Depression that are not likely to be repeated. In fact, the Fed at that time kept lending tight, while today's Fed is pumping hundreds of billions of dollars into the banking system to try to restart lending and spur economic activity.

"The fact is that central banks around the globe will move heaven and earth to avoid having a depression," said Banerji.

Still, other findings of the CNN poll were more in agreement with those of top economists.

The poll found 84% of Americans polled believe that economic conditions are somewhat or very poor, with a majority, 53%, now believing the economy is very poor. That's not far off from the two-thirds of NABE economists who believe the economy is now in a recession or will enter one by the end of this year.

The view of the economy is much bleaker than a comparable CNN/USA Today poll found during the last economic downturn at the start of the decade. During the recession of 2001, only one-third to one-half of those polled felt economic conditions were somewhat or very poor.

Unemployment continued to rise after the recession ended in late 2001, and not surprisingly the view of the economy continued to deteriorate. But at its worst, in a February 2003 poll, only two-thirds of those surveyed described the economy as somewhat or very poor. Just 25% of those surveyed at that time described the economy as very poor, or less than half the level who believe that today.

In addition, the CNN poll released Monday found that 36% believe the current crisis in the nation's financial sector will affect them immediately, while another 19% expect to be affected within the next year. Only 8% believe they will never be affected by the crisis.

Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke have frequently warned in recent weeks that the credit crisis would be felt on Main Street, not just on Wall Street.

And Banerji said that the increasingly grim view of the economy will by itself lead to cutbacks in spending by both consumers and businesses. That in turn will result in greater job losses and more economic pain.

"The fact that the majority of people believe we are going into a depression ensures that the recession will get worse," Banerji said. To top of page

First Published: October 6, 2008: 1:18 PM ET

[bardy]

meh

[Ol' Couch Ass]

This is one of the few times I'm glad to be working for the gov'ment.

[neopryn]

i saw the thread title and thought of, like, clinical depression

[Nimrod's Son]

60% say what the media keeps telling them will happen.

[sppunk]

If they'd simply announce tomorrow America is in a recession, things would calm down a bit.

Instead, they're pretending once again this is a hiccup on the Great American Economy Train and all will right itself in a few months.

This entire situation has been building since the mid-to-late 1990s, and it's not going away anytime soon.

[Nimrod's Son]

Doesn't anyone think the problem is that this is a poll about what Americans who don't understand finances think is going to happen to the markets?

[sppunk]

Most Americans know the same as most politicians and financial advisers, unfortunately.

[Karl Connor]

the next president is pretty much a garaunteed one-termer

[JokeyLoki]

Originally Posted by Karl Connor

the next president is pretty much a garaunteed one-termer

Thank God

[Eulogy]

Originally Posted by sppunk

If they'd simply announce tomorrow America is in a recession, things would calm down a bit.

wouldn't that involve changing the definition of recession?

[sppunk]

You really believe the economy hasn't been a) slowing for more than six months and b) businesses haven't begun downsizing?

[Travis Meeks]

Eulogy, once and for all, please lecture us on the definition of a recession so you can end this definition shtick

[Eulogy]

The standard newspaper definition of a recession is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.


---

i didn't realize that it's as flexible as it apparently is though. whatev. carry on.

[Travis Meeks]

Great, thank you Eulogy. You guys were saying?

[Eulogy]

Originally Posted by bardy

meh

Originally Posted by Ol' Couch Ass

This is one of the few times I'm glad to be working for the gov'ment.

Originally Posted by neopryn

i saw the thread title and thought of, like, clinical depression

Originally Posted by Nimrod's Son

60% say what the media keeps telling them will happen.

Originally Posted by sppunk

If they'd simply announce tomorrow America is in a recession, things would calm down a bit.

Instead, they're pretending once again this is a hiccup on the Great American Economy Train and all will right itself in a few months.

This entire situation has been building since the mid-to-late 1990s, and it's not going away anytime soon.

Originally Posted by Nimrod's Son

Doesn't anyone think the problem is that this is a poll about what Americans who don't understand finances think is going to happen to the markets?

Originally Posted by sppunk

Most Americans know the same as most politicians and financial advisers, unfortunately.

Originally Posted by Karl Connor

the next president is pretty much a garaunteed one-termer

Originally Posted by JokeyLoki

Thank God

hard hitting, groundbreaking stuff.

[Travis Meeks]

I know a thread of the year when I see one

[Mo]

It's not like your current economic state wasn't predicted for years and years. "Likely"...

[Caine Walker]

i didn't really know where else to put this, but it seems mildly related:

http://assets.236.com/images/photo2/...l/original.jpg

[Rockin' Cherub]

people can come up with statistics to prove anything, kent. forfty percent of all people know that

[JokeyLoki]

http://money.cnn.com/2008/10/10/mark...ion=2008101005

The Dow plunged at the opening bell, dropping more than 660 points in the first minutes of trading to below 8,000. World leaders are trying to calm anxious investors, CNNMoney reports.

Blech. I wonder why they're anxious CNN? I WONDER???

Originally Posted by Karl Connor

the next president is pretty much a garaunteed one-termer

good call dumbass

[Order 66]

http://media.tumblr.com/tumblr_lidxxfQdU01qfdfqc.gif