The new ABCNews/Washington Post poll out this morning turns out to be a bleak snapshot of the economy.
The good news: half of Americans say the recovery is beginning. But the vast majority of Americans fear it will be weak … all because of huge job losses fueling deep pessimism. The poll finds 64 percent of Americans are worried about maintaining their standard of living over the long-term.
I spoke this morning on “Good Morning America” with economist Liz Ann Sonders and New York Times reporter Andrew Ross Sorkin about how those attitudes could affect economic recovery.
GEORGE STEPHANOPOULOS: When he talked to Charlie Gibson, President Obama said the job losses caught him by surprise.
PRESIDENT OBAMA: We didn't understand the repeatedty of job losses in those first three months: January, February, March, actually starting in December. You saw 700,000 jobs lost. You saw 650,000 job lost in each of the months//. We knew the job growth was going to be lagging severely and that was going to be one of our greatest challenges.
GEORGE STEPHANOPOULOS: Boy, there’s an understatement. And for more on this we're joined now by two economic powerhouses. Liz Ann Sonders. And "New York Times" reporter, and author of "Too Big to Fail," Andrew Ross Sorkin. And there does seem to be from this poll a little more hope. Half the country believes the recovery has begun. But they don't think it will be much of a recovery. And Liz Ann, that means that the country is pretty much in line with what most experts think.
LIZ ANN SONDERS: Look, when you look at the depth of the downturn, and you look at the history of deep recessions, they are usually followed by very quick pops out of the recession. In fact, if you were to look at an average, it would suggest about an eight percent or nine percent GDP in the first or second quarter of this recovery. We obviously didn't get that in the first quarter of recovery. We're unlikely to get it. There's no question that this has been a subdued recovery, in light of just how damaging the recession was. So that's an easy call.
GEORGE STEPHANOPOULOS: We're not seeing the rubber band effect. And that means unemployment through most of next year. Very high unemployment.
ANDREW ROSS SORKIN: Through most of next year. And part of the problem is, we look at the 10 percent number. And some economists frankly that think it can get worse. But marginally worse.
GEORGE STEPHANOPOULOS: But Larry Summers told me on Sunday job growth this quarter.
ANDREW ROSS SORKIN: The hard part is the number that people don't pay attention to. The average hours worked every week, which is only 33. Which is a real low. If you want to be more productive, you're a business, you think you want to go hire more people, you make the person who is working 33 hours work 35. So there's a lot of room between before we get that 10% number.
GEORGE STEPHANOPOULOS: A lot of businesses and a lot of state and local institutions cut back. They said take Fridays off. One Friday off a month.
ANDREW ROSS SORKIN: Exactly.
GEORGE STEPHANOPOULOS: Meanwhile, we saw the federal reserve yesterday come out with a statement saying they expect interest rates to remain low for a pretty long period of time, even though they're starting to pump back their emergency programs. Ben Bernanke yesterday named person of the year by "Time" magazine. But he's running into a bit of a buzz saw confirmation.
LIZ ANN SONDERS: "Time" names a person of the year because of their influence. Not because of praise.
He's been an extraordinarily influential person. I understand the split. Bernanke, there's a lot of armchair quarterbacking of last fall's emergency efforts. I think that piece of his history will go down on the positive side of the ledger. We won't know what ifs. We only know he seems to have prevented the kind of collapse that was a possibility. It's what predated that, I think, that gets the most just criticism.
GEORGE STEPHANOPOULOS: And now, is he waiting too long to put on the brakes. Some people worry about that. And he says low interest rates for a long period of time.
ANDREW ROSS SORKIN: I suspect we may not feel it that way. So, there will be low interest rates probably through the rest of this year. However, he has to start taking his foot off the brakes on other programs that pumped a lot of money in the system. And that means higher mortgage rates as we get closer to the summer.
GEORGE STEPHANOPOULOS: Because the banks have been using that money. Bring us back to the banks. The president started off this week calling in all the bankers to Washington.
A few of them didn't make it. Seemed like a message to the president. How hard do you think they
ANDREW ROSS SORKIN: I think they tried to get down. I think there's a larger issue, which is now that the banks have paid back the TARP money, now that we, the taxpayers are no longer shareholders, we'll see proposals, obviously, and some change. But the real change that I think some people were hoping for, suspected would take place, it will be harder to get there.
GEORGE STEPHANOPOULOS: Let me go back to the poll for a second. Two other disturbing numbers in the poll, Liz Ann.60 percent of Americans think the economy is in long-term decline. Excuse me. And 64 percent worried about maintaining their standard of living over the long-term. That seems like the definition of the kind of malaise that Jimmy Carter had to deal with back in the '70s. What's the real economic impact of those kinds of attitudes?
LIZ ANN SONDERS: Well, first of all, I don't think it's all that abnormal when you have the kind of deep recession we have had, accompanied by double-digit unemployment. You go back to 1983, when we had an 11 percent unemployment rate. We were coming out of back-to-back recessions. A lot of similarities to the current environment. You had similar levels of pessimism. What we didn't know at that time was we were about to unleash an 18-year period of unprecedented growth and prosperity. I would love for that to be what we're facing in the next eighteen years. It is certainly not the base case call. But I think we have to remember the pessimism that's bred after such a deep downturn is actually fairly normal because people are in that sort of emotional mode.
GEORGE STEPHANOPOULOS: But it broke for Ronald Reagan. Will it break for Barack Obama?
LIZ ANN SONDERS: Let's hope.
GEORGE STEPHANOPOULOS: Liz Ann Sonders, Andrew Ross Sorkin thank you very much.
ANDREW ROSS SORKIN: Thank you for having us.