The Consumer Sentiment Survey of Americans, created by George Katona at the University of Michigan in the early 1950s and known today as the Thomson-Reuters University of Michigan Surveys of Consumers, has included a remarkable question about the reasonably long-term future, five years hence, and asks about visceral fears concerning that period:
Looking ahead, which would you say is more likely—that in the country as a whole we’ll have continuous good times during the next five years or so, or that we will have periods of widespread unemployment or depression, or what?
That question is usually not singled out for attention, but it appears to address directly what we really want to know: what deep anxieties and fears people have that might inhibit their willingness to spend for a long time. The answers to that question might well help us forecast the future much more accurately.
Those answers plunged into depression territory between July and August, and the index of optimism based on answers to this question is at its lowest level since the “great recession” of the early 1980s. It reached its highest level, 135, in 2000, at the very peak of the millennium stock market bubble. By May 2011, it had fallen to 88. By September, just four months later, it was down to 48.
This is a much bigger downswing than was recorded in the overall consumer-confidence indexes. The decline occurred over the better part of a decade, as we began to see the end of debt-driven overexpansion, and accelerated with the latest debt crisis.