Connoisseur of highbrow culture that I am, last week I watched the Wanda Sykes stand-up comedy special on HBO. Hilarious, if more than a little ribald. Anyhow, she does this bit about how people from every country think their national customs are superior to all others.
Her South American tour guide described a particular bird whose behavior is viewed as a predictor of whether the weather will be the same the next day. Sykes’ French wife tried to one-up the tour guide, telling of a bird that, in her native land, is believed to predict rain with its song. Sykes trumped them both, declaring that in America, we have meteorologists who can predict the weather for five days out!
In America, we don’t just have meteorologists, we also have economists — lots of them. Just now, most of them are chiming in to create a chorus declaring that the recession is over. But that’s certainly not the feeling in the air among the most natural of all economists — consumers — not in my experience at least.
The question that came to my mind as I watched Sykes extol the superiority of professional vs. natural weather indicators was this: Should we take the word of the economists or the pulse of the people in determining whether the recession is over?
In October, the National Association for Business Economics surveyed 43 of the nation’s top economists to ascertain their take on where we’re at in the timeline of this recession. Some 80 percent — all but four — believe the recession is over and the recovery has begun, although all opined that the recovery process will be "slow and painful." Ouch.
Many consumers, on the other hand, aren’t nearly so certain or unanimous. People’s general view is probably more self-centered than the economists’ national perspective. If you or your spouse is out of work, underwater or on mandatory employer-imposed work furloughs right now, chances are slim that you’ll agree that we’re over the worst of it.
Anecdotally, even my house-hunting clients are not 100 percent certain this recession is behind us. Buying a home is an experience usually characterized by an overwhelming optimism about the future on the part of the homebuyers. My buyer clients these days, while confident that they’re buying at a great time, are still very wary — or perhaps recession-weary — of making assumptions about their financial future.
There is none of the normal optimism young couples and professionals usually have about their income rising as a matter of course over the next few years. My buyers are buying way below what they qualify for and even often way below what they can afford, based on their own household spending plans. Many two-income couples are buying with the plan to limit their mortgage payment to what they can afford on one income, just in case someone loses a job or gets laid off.
This is worst-case-scenario homebuying. …CONTINUED
My buyers are flush, but are nevertheless being very frugal, hunkering down until they think this thing is really over. The unemployment issue feels to them like a constant unknown, a looming cloud the threat of which most of them think is nowhere near over. Most of them are hopeful that this storm we’re in will be over soon, but are nowhere near convinced that the blackest clouds have already passed. They spout off stats about how many adjustable-rate mortgages still have yet to reset like they are economists themselves.
And on the employment issue, at least, the economists confirm the consumers’ suspicion, predicting that the national unemployment rate will actually rise in the first quarter of 2010 before beginning to decline later next year.
Is it that the economists are waving the "mission accomplished" flag, George W. Bush-style (that is, prematurely)? Or is it that consumers’ experience of recession necessarily lags the actual recession, as technically defined? Or is it that we’re all so worn out from this thing that our collective recession-era thinking will linger for a long, long time to come — like the Depression-era thinking that still causes many great-grandmothers to line their cans of corn with wads of cash?
The economists, for their part, simply and (one would hope) without emotional attachment to the direction of the outcome, analyzed the various indices that have historically revealed how much life, if any, was still left in a given recession. All signs pointed to none being left in this one, so they issued their verdict.
The proletariat, however, decides whether the recession still exists based not on fancy equations or ratings or surveys, but based on the facts of their daily reality, their job status and the state of their accounts — and the impact of those data points on their emotional state: fearful or confident or wary with a side of guarded hope.
So which approach is more correct? The observations of consumers in their natural habitat or those of the economists behind their desktop monitors? Very likely both, though it’s important to stay mindful that consumer confidence is a much-needed ingredient for true economic recovery, as it fuels the shopping-to-hiring domino effect.
As such, perhaps it makes sense for those touting the end of the recession to stop and listen for the consumer birdsong before giving the economic meteorologists the last word.
Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.
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