This blog contains posts and comments written by students in Dr. Tufte's economics classes at Southern Utah University.
4/12/2007
Who is Right: The People or the Professionals?
I just read an article in business week about the economy in the US today. It talked about the direction our economy is moving presently in relation to how it is viewed by the general public. The article stated that most professionals are optimistic about our economic future and feel that the current low unemployment will continue to remain low for a while. The public, however, feel very differently about this. Specifically the lower income segment of the United States, those below $40,000 a year, view our economy much more pessimistically. The article went on to state that often times the public has been right regarding future economic downturns. This makes sense considering that the people who have these feelings about the market are the same people who influence the market through their buying habits. Personally, I agree with the article when it stated that many of these people are pessimistic about the future economy of the US only because it is an uncertainty and they are afraid of that uncertainty. I think that when people don't know the outcome of something they become more afraid in relation to that thing. With this in mind, people are afraid of what the economy might do in the near future because they are not positive of what it will do. I think that if we look at the economy today, it seems to be moving in a very good direction and I, for one, see that as a positive sign that it will continue to be good in the future.
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8 comments:
One interesting point is that those who have an income below $40,000 a year "view our economy much more pessimistically." That's funny because a lot of these people probably stress over money quite a bit. They may be worried about paying their mortgages and other expenses. They see how housing costs and gasoline prices have raised and only become more stressed. In conclusion, when many people get stressed, especially over money, it seems that blaming the economy or the government is an easy out.
That is an interesting article Hunter. It seems like the individuals with lower incomes probably view our economy negatively because they are experiencing financial difficulties and therefore view the world in a negative tone. I agree with you Hunter, I think our economy is in a stable condition right now; unemployment is low, wages are increasing and homeownership is up.
The economy does look good and has been stable, but look at the trends throughout history. It has always been ups and downs. I think people expect a recession to come soon because we have been in a boom for quite a while now. If enouh consumers expect the economy to fall, they will spend less and their spending habbits wil have a major effect on what actually happens in the economy.
-1 on Hunter for poor capitalization.
A lot of this is a matter of scope, and inability to understand one's place in the world.
Poor survey questions exacerbate this problem, and underinformed members of the media make it worse.
Here's an idea: ask someone for a specific story about how they were hurt in the last recession. You won't find that people were unhurt, but if you start asking for specifics, you find they are much less capable of actually coming up with something.
Dr. Tufte said:
"Here's an idea: ask someone for a specific story about how they were hurt in the last recession. You won't find that people were unhurt, but if you start asking for specifics, you find they are much less capable of actually coming up with something."
It's true! Often, I think the general public is guilty of taking the media for face value. When the media cries that there's a recession, the people repeat, "We're entering a recession, and it hurts!" But really, if Americans took a look at their own position in life, most people will probably find they are not worse off now than they were last year.
Dr. Tufte,
I agree with you and think that so many surveys are not properly done. In taking Marketing Research, Dr. Roberts showed us countless of surveys that all swayed the results one way. It is important that surveys are done in a nonbiased way.
Secondly, I think that people all have a perceived view of recession as a horrible green monster. When in fact it really isn't as bad as we all think it is. However I think that a lot of times if the public thinks we are going to do badly, then we will. It is basic psychology; if you think it then you will do it.
Dr. Tufte-Extra Credit
I agree with Dr. Tufte's statement about people coming up with specifics about how they were hurt during the last recession. The last recession was in 2001 and I don't remember much about the recession. I do remember 2000-2001 being the best financial years that I have had to this point and we were in a recession. It is a matter of scope and the media does a great job of distorting our view of reality.
-1 on William for poor grammar.
It's been a year since this post went up, and the economy is worse, but still not in a recession.
That isn't anything like the talk you've heard in the legacy media over the last year.
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