Tuesday, March 11, 2014
If you think the economy has tanked in the past year, you're not alone. More than nine of 10 Mainers feel the same way, according to a new statewide opinion survey.
The survey by the Portland polling firm Critical Insights shows a stunningly poor assessment of where the economy stands today and a bleak view of where it's headed:
n Ninety-one percent of the Mainers polled said the economy has gotten worse in the past year. Just 8 percent said it's stayed the same and only 1 percent think things have gotten better.
n Only 15 percent think the economy will improve over the next year. A majority, 55 percent, said things will get worse, while 26 percent didn't expect any change in an economy that looks pretty bad right now.
n Three of five Mainers said they're putting less money into savings than they were last year, suggesting household budgets are being drained by high prices for everything from gasoline to bread.
Michael Hillard, an economics professor at the University of Southern Maine, said it's no surprise that Mainers see the economy as a dark cloud without a silver lining.
''It's unprecedented unless you go back to the Depression,'' he said.
The economy's troubles are deep and wide. They include a housing market that has gone from bubble to burst; increasing rates of mortgage defaults and foreclosures; a financial system rocked by increasingly troubled credit markets and the specter of bank failures; and inflation pushing up prices for everything from oil to flour.
The numbers involved -- hundreds of billions of dollars to prop up the mortgage market, for stimulus checks to spur spending and to rescue failing banks -- are ''astonishing,'' Hillard said.
''Things really did go kind of crazy for a while and the snapping back is just across the board,'' he said.
Roger Melancon, a survey participant who lives in Lyman, agrees with Hillard's sentiment.
''My wife went out and bought two loaves of bread for $5. It's crazy,'' he said. ''Four dollars a gallon for gas, the price of food is going up and there's just been so many increases and people aren't getting an increase in pay.
''I don't see how the average person is doing it,'' he said. ''My son, to go back and forth to work, it costs him $100 a week.''
''It really stinks right now,'' said Bruce Cooper of Chelsea, another survey participant, although he thinks the country will turn a corner at some point.
''I don't know if we've hit rock bottom, but economics has always been a roller coaster and I think we'll bounce back,'' he said.
Part of the problem is an abrupt shift in people's perceptions of their own financial status, Hillard said.
The economy wasn't particularly robust during the early part of the decade, but people were able to take out equity in their homes, which were shooting up in price. That led to a ''wealth effect,'' in which people with homes that were suddenly worth $250,000 or more felt entitled to tap into that value and take a vacation or buy a new car.
''It was sort of a spendthrift mentality,'' Hillard said. But with home prices now dropping and people carrying higher debt because of that earlier spending, ''we have a very strong reverse wealth effect going on.''
Mainers aren't the only ones feeling that effect.
The Conference Board, a nonprofit business research organization, said its consumer confidence index hit a record low of 50.4 in May and assessments of the current economy and expectations for the future also dropped sharply. The index is calculated from a survey of 5,000 households using 1985 as a base with a reading of 100.
Critical Insights' survey was based on telephone interviews with 602 Mainers from June 1-27 and has a margin of error of plus or minus 3.4 percentage points.
The pessimism in Maine and nationally could carry over into the voting booth, said Mark Brewer, associate professor of political science at the University of Maine, but it's most likely at the national level.
''The average American voter sees the president as overwhelmingly responsible for the economy, for good or ill,'' Brewer said. ''If it's going well, the president gets far more credit than he deserves, and if it's going poorly, he gets far more blame than he deserves.''
That doesn't often translate to races for the House or Senate, Brewer said, ''which does make some sense, because there's very little one person in Congress can do.''
People may be clamoring for change, he said, but ''they want broad, big-picture change, not small, micro change.''
Economic distress generally favors the Democrats, because they're seen as ''the party of assistance,'' said Kenneth Palmer, professor emeritus of political science at the University of Maine. But Mainers don't tend to be party-line voters, he said, and that could blunt the impact of the economy on the election.
But from a pollster's point of view, the results of the survey are pretty earth-shaking.
''This is major,'' said MaryEllen Fitzgerald, president of Critical Insights. It suggests, she said, that global economic forces are hitting home.
''People have been hearing this,'' she said. ''Now, they're living it.''
Staff Writer Edward D. Murphy can be contacted at 791-6465 or at: