New Citi Survey Finds 62% of Americans Believe the Economy Has Yet to Hit Bottom

NEW YORK–A new nationwide survey issued today by Citi, and conducted by Hart Research Associates, shows that nearly two-thirds of Americans (62 percent) believe the economy has yet to hit bottom. This represents a 3 point decline from March, when 59 percent said we have a long way to go, and a return to the level measured in September (63 percent). According to the survey, just one-third (33 percent) believe the economy has hit bottom, even though Commerce Department data indicates the U.S. economy resumed growing in 2009’s third quarter.

In addition, the data reveals that, as we pass the halfway point of 2010, Americans’ expectations for when the economy will stabilize for their households have slipped quite far into the future, with 62 percent believing it will be at least two or three years, if not longer, and more than one quarter (28 percent) believing it will be four or more years until the economy stabilizes for their household.

At the same time, however, Americans’ views on current economic conditions, as well as their outlook on their own personal financial situations, are improving or holding steady.

According to the data:

• Twenty-four percent say the local economy where they live is good or excellent, up from 19 percent in March.
• The percentage of Americans who say their personal financial situation is better now than a year ago has improved slightly since March (17 percent versus 15 percent). Fifty-two percent said their personal financial situations are about the same as they were a year ago.
• Although down slightly from March, 64 percent of Americans remain very or somewhat optimistic that their financial situation will improve in the next twelve months, compared to 32 percent who are somewhat or very pessimistic.

Americans’ views on local employment opportunities, however, remained weak, with 85 percent reporting opportunities as only fair (36 percent) or poor (49 percent). In a measure of potential consumer demand, 62 percent of Americans believe that, in the current environment, it is only a fair (30 percent) or poor (32 percent) time to make a major household purchase, up from 61 percent (27 percent and 34 percent, respectively) in March.

“Clearly, the mood of Americans has been heavily influenced by the unemployment numbers here at home and the news of economic woes in Europe,” said Jonathan Clements, Director of Financial Education at Citi Personal Wealth Management. “And yet, if you dig deeper, consumers are actually feeling a bit better about their own finances and the local economic outlook. The big question is, could the gloomy news become a self-fulfilling prophesy, prompting consumers to restrain their spending, thus hurting the economic recovery?”

A Quarter of Americans Struggle with Debt, Highest-Earning Americans Impacted As Well

Americans of all ages and income levels are struggling with debt. The survey found that, while no one category of debt presents a major problem to more than about a tenth of U.S. families, as many as 25 percent responded that there is at least one category of debt that is a major challenge or is becoming unmanageable.

• Of those surveyed, health expenses are a major or unmanageable problem for 11 percent followed by credit card debt (9 percent). Including other categories of debt such as mortgage debt (6 percent), student loans (5 percent), consumer loans (2 percent), and child support (1 percent), a full quarter of the public reports a major or unmanageable problem with at least one category of debt.
• People in their 30s (32 percent) report having at least one area of debt that is a major or unmanageable issue, higher than any other age group. This compares with Americans under age 30 (28 percent), in their 40s (30 percent), and in their 50s (27 percent) who responded similarly.
• Interestingly, among the top-income bracket (Americans earning more than $150,000 annually), 21 percent report having at least one area of debt that is a major or unmanageable issue. This compares to 15 percent of Americans earning $75,000-$150,000; 22 percent earning $50,000-$75,000 and 33 percent earning less than $50,000 annually.

“It is startling to see more than a fifth of high-income earners express concerns about their debt,” noted Clements. “This may speak to their overconfidence during the boom years, as they took on first and second mortgages to buy real estate and pay other expenses.”

Summer of the ‘Stay-cation’

Reflecting current economic worries, three in five Americans responded they will either not vacation at all or will stay home during their time off this summer.

• A full 51 percent of Americans say they will not take any vacation at all this summer.
• Sixty percent of Americans will either not vacation at all or else will stay at home as their vacation.

Clements added, “Given the sluggish economic recovery, it is no surprise that Americans remain conservative with their spending, saving and summer vacation plans. Americans’ fiscal discipline is admirable. Still, lower consumer spending may slow the economic recovery.”

Majority of Americans Believe They Are Living the American Dream, Especially Older Americans

Despite the current economic challenges, Americans remain remarkably optimistic. The survey found that 53 percent of Americans believe they are living the American dream and nearly three in four (73 percent) say they are either living the dream now or expect to live the dream in the future. Older Americans lead the way in responding they are currently living the dream, while young Americans remain hopeful.

• Sixty-five percent of Americans over age 70 believe they are currently living the American dream.
• Comparatively, more than half of Americans in their 60s (56 percent), 50s (55 percent), and 40s (51 percent) also say they are currently living the American dream.
• Forty-seven percent of Americans under age 30 say they are currently living the American dream, while just 43 percent of Americans in their 30s say they are.
• A full 83 percent of 18-to 29-year-olds believe they are or will live the American dream in the future, while people in their thirties remain hopeful, but less so (75 percent).

By 56 percent to 24 percent, a majority of Americans believe that the American dream is more defined by family, faith and freedom than it is defined by material goods or financial elements such as housing, income or lifestyle.

Citi conducted this nationwide survey as part of its ongoing effort to better understand changes in the needs of the consumers and communities the company serves.

Survey Methodology

Hart Research Associates conducted the telephone survey of 2,005 adults nationally from June 22-29, 2010. The Random Digit Dialed (RDD) survey has an overall statistical margin of sampling error of plus or minus 2.2 percentage points. The survey also included a panel of respondents who use only a mobile telephone.

About Citi
Citi, the leading global financial services company, has approximately 200 million customer accounts and does business in more than 140 countries. Through Citicorp and Citi Holdings, Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Additional information may be found at www.citigroup.com or www.citi.com.