Consumers Not Confident In Economic Recovery

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STATE—According to the quarterly consumer survey by Fairleigh Dickinson University’s Silberman College of Business, 67% of New Jerseyans have lost a job or have a friend or relative who has lost a job in the past year, a new high, up from 63% in the previous quarter.

However, only 10% are “very worried” that they might lose their job, down 3 points from July.  Moreover, the number of those “not at all worried” increased 8 points to 49% from the previous quarter.  Worry is greatest among those aged 30-44: 37% say they are somewhat or very worried they might lose their job.

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“The picture is quite mixed, depending on your station in life,” said Sorin Tuluca, professor of finance at the Silberman College of Business and a specialist in financial crises. “Employment is a lagging indicator of economic recovery, not a leading one.

“We should think of the economic crises as a traffic light on red at rush hour.  It takes a long time for the last cars in line to clear the intersection. In the same way it takes a long while for employment to come back to where it was,” added Tuluca.

“Consumers are still holding on to their wallets,” said Tuluca.  New Jersey consumers have not significantly changed their expectations over the past quarter: 86% say they will not let their unpaid credit card balances increase.

However, more than a third (36%) of New Jerseyans continue to say that paying their outstanding credit card balances is somewhat or very difficult.  Moreover, 45% of those making less than $50,000 a year report that paying credit cards balances is difficult, and 1 in 5 (19%) making under $50,000 per year say they’ll let their unpaid balance increase in coming months.

This contrasts with the 2% making over $150,000 who say they’ll let their credit card balances increase.  In fact, 65% of those making less than $50,000 a year say they’re worse off than a year ago.

While about half (48%) continue to say they can live off their savings for more than six months if they lose their job, the percentage of those who say they can live three to five months on their savings declined 7 percentage points, while those who say they can live for less than three months off their savings rose by 6 points.

A majority (53%) of respondents still say they are worse off now than they were a year ago, but this is a decline of 6 points from the previous quarter.  At the same time, 25% think they’ll be worse off a year from now, down 7 percentage points from the previous measure.

“If people are not more optimistic,” said Tuluca, “at least we can say they are less pessimistic.”  He concluded, “They remain cautious, so they continue to save more and trim down expenses.”

Only 28% say they feel confident that life for their children’s generation will be better than it has been for them:  62% feel “not confident.”  This reflection of pessimism is highest among those over 60.

The telephone survey of 631 randomly selected adults throughout New Jersey who participate in their household’s financial decisions was conducted from Sept. 28 through Oct. 4 and has a margin of error of +/- 4% percentage points. The poll was sponsored by Fairleigh Dickinson University’s Silberman College of Business and conducted by FDU’s PublicMind. Samples for some questions are smaller, as noted.


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