It’ll Take More than Talk Of Recession to Subdue Consumers’ Animal Spirits takes

Hailed as heroes of the late lamented boom, free-spending consumers are now being fitted out for the role of villain. If they suddenly shut their wallets, economists fear, these people could turn a mild downturn into a full-fledged recession. Will fears of unemployment keep consumers from rallying anew to the retail battlements? A couple of surveys (conducted early this month) shed light on the matter. Asked by Fox News/Opinion Dynamics to rate the odds that “you or someone in your family will lose their job this year,” a majority of the respondents said it’s “not very likely”(33 percent) or “not at all likely” (39 percent). Just 10 percent said it’s “very likely.” While39 percent said they’ve tried to reduce their “household and personal spending because of concern about a possible recession or job loss,” we’re entitled to wonder how hard they tried. What if people have to live off their savings after losing a job? As the chart shows, fewer than one in three of Fox News’ respondents could last more than a year without taking on debt. A Gallup poll posed the problem a bit differently, asking people how long they could go before suffering “significant financial hardship” if they found themselves jobless. Thirty percent could go unscathed for up to four months; 13 percent could do so up to one year, and 10 percent would be fine for “more than one year.” But 15 percent would feel

the pinch after a single week, and 31 percent would do so by the end of one month. The issue is not merely abstract: Among Gallup’s respondents who work full-time, 53 percent “personally know” someone who’s lost a job within the past 12 months. Still, with the last recession a distant memory for many Americans, current worries seem to lack a gut-level intensity. A majority of Gallup’s respondents felt it’s very likely (35 percent) or somewhat likely (29 percent) they’d find a job “just as good” as their current one if they got the ax. Just 11 percent said such a happy ending is “not at all likely.” In the meantime, Alan Greenspan needs to give 10 percent of Americans a good talking-to. While 8 percent of Fox News’ respondents said recent reductions in interest rates would encourage them to increase their spending, 10 percent said the Fed’s action would prompt them to spend less!