On Friday the latest Allstate/National Journal Heartland Monitor poll was released. The focus of this latest study was the interaction between household confidence and debt, personal and public. Ron Brownstein describes the findings for NJ: Credit Scarred. The full poll results, well worth browsing through, are here. Seen as a forward-looking economic indicator, they are bleak. They make especially painful reading for Democrats, by the way, because they suggest that persistent or worsening pessimism over debt is eroding support for the president. From Brownstein's article:
Three-fourths of those polled said they believed they personally would be better off if they carried "no debt by paying off all your loans right now." Just one-fourth accepted the idea that debt made them better off by allowing them "in effect [to] borrow from your future income." On that ringing declaration, the views of whites and minorities, the young and the old, those with and without college degrees, and even the wealthy and the poor varied little. Jared Quincy, a lawyer in Herriman, Utah, eloquently expressed the aspiration inherent in that finding. "I think too many people confuse the American Dream with 'I can have whatever I want' and believe debt is a pathway to having whatever you want," he says. "I would submit that the American Dream is self-determination, and enslaving yourself to creditors is no way to self-determination."
Most Americans may not be able to achieve that ideal (83 percent reported holding at least one form of debt), but many are looking to steer their lives in that direction. When asked whether the economic downturn had required them "to cut back on spending on things such as clothing, vacations, and dinners out in order to pay down your debt or not acquire any new debt," more than three-fifths said yes, while only about one-third said no.
At an event yesterday to launch the poll, I moderated a panel of experts (Joe Gagnon, Jeff Lubell, Margaret Simms, and Terry Savage) to discuss the issues raised. Not wishing to put words into their mouths, I'd say they agreed that fears (not necessarily well grounded) about public debt, together with the seeming incapacity of Washington to deal with that problem, were compounding household anxieties about personal finances: a vicious circle, because household pessimism slows the economy and worsens the long-term fiscal outlook.
Terry Savage (among other things, author of "The Savage Truth On Money", a volume of sound, deftly delivered advice about household finance) underlined the point made in the clip above: she reckons this recession will cause a generational shift in the American idea of prosperity from "What do I own?" to "Am I financially secure?" It's an intriguing idea. It would have far-reaching economic implications.