The Conference Board said this week that in September exactly 50 percent of Americans polled for its consumer confidence survey said jobs were “hard to get.” This slightly exceeds the figure of 49.4 percent who felt that way in October 2009, the month the unemployment rate peaked at 10.1 percent. The most recent unemployment rate, for August, was a full point lower.
The difference is small, and statistically insignificant. But it nonetheless illustrates how economic pessimism has risen in recent months, more than two years after the recession officially ended. As can be seen in the accompanying charts, there has also been a sharp drop in expected interest rates, itself a sign of an expectation that the economy will not soon recover.
The Conference Board jobs question, asked regularly since 1967, offers three possible responses, with the others being that jobs are “plentiful” — 5.5 percent in September — or “not so plentiful” — 44.5 percent in the latest survey. During only one previous cycle did the “hard to get” figure get to 50 percent. In 1982, when the unemployment rate rose to 10.8 percent, the figure topped out at 61.6 percent.
The Conference Board survey also asks for forecasts as to whether there will be more or fewer jobs in six months. In September, 12 percent expected improvement, up slightly from 11.8 percent the previous month. They were the lowest figures since the recession officially ended in June 2009.
The final chart shows an interest rate not usually seen — the market forecast of the yield on five-year Treasuries issued five years from now. There is a forward market for Treasuries, where such esoteric things trade. Rates have been low for a few years because of the weak economy and accommodative monetary policy, but there has been general confidence that within five years the economy will have improved enough that rates will be higher.
An exception to that came in late 2008, when the market forecast suddenly plunged as the credit crisis intensified and fears grew of a Great Depression. At the low point, just after Christmas, the forecast was for a rate of 2.84 percent five years later. As fears calmed, the rate rose.
Last week, another plunge pulled down the rate to 2.76 percent, lower than in 2008. This week, it bounced back to a little over 3 percent, still a low rate.
Some of that decline stems from the Federal Reserve’s announced plans to try to hold down longer-term rates, but it seems unlikely that is the entire explanation. The more likely reason is that there is rising worry that economic growth will not return for years, as governments and central banks are unwilling or unable to take measures needed to produce recovery.
President Franklin D. Roosevelt famously said at his first inauguration, in the depths of the Depression in 1933, that “the only thing we have to fear is fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.” There is a lot of fear now, and that fear may itself be working against a recovery.
Floyd Norris comments on finance and the economy at nytimes.com/economix.
Article source: http://feeds.nytimes.com/click.phdo?i=b898d2bffb828fb7a2ab04e9d7d5315b
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