Saturday, April 5, 2008

The Lost Highway

THE BE YOUR OWN ECONOMIST ® BLOG

Hank Williams sang about “The Lost Highway,” and warned us to stay off it.

Yesterday’s New York Times, in an article by David Leonhardt and Marjorie Connolly, reported that “81% in Poll Say Nation Is Headed on Wrong Track.”
(http://www.nytimes.com/2008/04/04/us/04poll.html?_r=1&sq=marjorie%20connelly&st=nyt&adxnnl=1&oref=slogin&scp=2&adxnnlx=1207436746-L/Mp4o6GRtqc2dktyyRRig)

The article said:

“Americans are more dissatisfied with the country’s direction than at any time since the New York Times/CBS News poll began asking about the subject in the early 1990s, according to the latest poll……

“The dissatisfaction is especially striking because public opinion usually hits its low point only in the months and years after an economic downturn, not at the beginning of one. Today, however, Americans report being deeply worried about the country even though many say their own personal finances are still in fairly good shape……

“Only 21 percent of respondents said the overall economy was in good condition, the lowest such number since late 1992, when the recession that began in the summer of 1990 had already been over for more than a year. In the latest poll, two in three people said they believed the economy was in recession today…..”

If 21% of respondents said the economy was in good condition, that means almost 80% said it’s not in good condition. Moreover, the article said this kind of pessimism usually takes hold in the depth of recession, not at recession’s start. If this is how people feel today, how will they feel as the economy slumps further?

This is a very gloomy omen. So much hangs upon what consumers will do: Home purchases, residential construction, new-vehicle expenditures, general consumption, and so on. Why should households spending head north if most of us think the rest of the economy is heading south?

If these poll numbers mean what they appear to mean, we are really on the lost highway.

© 2008 Michael B. Lehmann