Economic Optimism Drops More Among Employed Adults Than Unemployed

Last week we looked at the trend of small business owners who declare themselves optimistic about the future of the U.S. economy. While we learned that small business owners are more optimistic in 2010 than they were in 2008, optimism has taken a dramatic turn for the worse in the past few months.

This week, we approach this data from a different point of view, by looking at changes in attitudes toward the future of the U.S. economy through the eyes of the employed versus the unemployed. Simmons DataStream shows us that just as in the case of small business owners, an increasing percentage of American adults, on average, – whether employed or unemployed – started feeling better about the future of the U.S. economy right after the height of the economic meltdown and the Presidential election in the latter part of 2008. In fact, on average in 2008, just 14% of those who were unemployed and an equal percentage of those who were employed thought that the U.S. economy would be better off in the next 12 months. Fast forward a year and optimism levels had spread to include 30% of the employed and 28% for those unemployed. 2010, however, paints a slightly different picture with optimism tapering off among both segments.

Interestingly, employed Americans now seem to be more jittery about the future of the U.S. economy than the unemployed. In fact, Simmons DataStream reveals that on July 19, 2010, only 18.5% of employed Americans were optimistic about the future of the U.S. economy compared with 37.7% of employed adults who were optimistic on August 3, 2009, a relative decline in optimism of 51% in just a year. During the same time period, the percentage of unemployed adults optimistic about the economy dropped to 21% from 34%, a decline of just 38%. from mid-August 2009 to mid-July 2010, we notice a decrease of 38%.

Just as in the case of increasingly wary small business owners, U.S. adults in general, regardless of their employment status are influenced by conflicting news about the economy, and their optimism has begun to falter. In the chart below, we see a correlation between unemployment levels reported by the Bureau of Labor Statistics and optimism. Specifically, rising unemployment levels have a strong negative impact on consumers, regardless of their employment status. If anything, those employed are the most fearful (hence the higher decline in optimism), perhaps because they still have got a job to lose.