Americans are becoming more pessimistic about the future, despite not seeing their own economic situations worsen One practical economic problem is that perception can sometimes dictate reality. Even if the economy is moving along well, if consumers get spooked -- whether for a legitimate reason or not -- it can take a step back. Of course, the reverse is also true: that's what causes bubbles. Irrational optimism about some asset, like houses, causes too much economic activity, which leads to a painful correction. Because perception matters, the media plays an important role. If it pushes the public in the wrong direction, then their sentiment about the economy could be skewed with a counterproductive result.
A new survey from the Pew Research Center for the People & the Press suggests that Americans are becoming more pessimistic about the future -- even though the present situation hasn't worsened.
Let's just focus on October 2010 and June 2011. Over this period, the U.S. economy appears to have slowed due in large part to consumers pulling back. So sentiment really matters here. For starters, most people's view of the current economy remained the same. Their financial situation also barely changed over these eight months. So people don't actually see the economy having worsened and aren't personally doing much better or worse than they were in October…
Yet, even more telling, Americans are much more pessimistic about what the future holds a year from now. Now, net 6% of respondents see the economy being worse a year from now. About the same margin see their finances getting worse in a year as well….
Read more at http://www.theatlantic.com/business/archive/2011/06/is-the-media-stifling-the-us-recovery/240998/
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