A report on how Americans across age groups and ethnicities are coping with the economic down turn. The full report is pretty interesting (~ 39 pages)
The full study report is available here:
http://www.metlife.com/dream
Highlights:
http://www.metlife.com/assets/cao/gbms/s...
The 2009 MetLife Study of the American Dream:
Rebooting the American Dream. Shifted. Altered. Not Deleted.
An Opportunity for Policymakers to Help Keep the Dream Alive
MetLife, the nation’s largest life insurer and a leading provider of employee benefits, has released
the findings of the 2009 MetLife Study of the American Dream. MetLife commissioned Penn,
Schoen & Berland Associates and Strategy First Partners to conduct 2,243 online surveys among the
U.S. general population from January 7 – 16, 2009.
Now in its third year, the 2009 MetLife study was designed to determine whether or not the American dream is alive, and how it’s being defined by the American consumer. Against the backdrop of the economic turmoil affecting the nation, major consumer behavioral and attitudinal changes revealed by this year’s research will likely have a lasting impact on how Americans achieve and sustain the dream.
While the majority of Americans believe they can still achieve the dream in their lifetimes, they have indicated that for the next year they’ll concentrate on shoring up the foundation of their personal safety nets. For the one-third of Americans who believe they have already achieved the dream, being able to sustain the dream — without backsliding — is becoming as important as achieving it in the first place.
The findings of MetLife’s most recent study present public policymakers, the private sector and the American public with a tremendous opportunity to come together to keep pursuit and achievement of the American dream, which is so embedded in American culture, alive and well for future generations.
The American Dream Defined
Against the backdrop of more contained consumerism, the very nature of the American dream has shifted. While the inaugural MetLife study first characterized the dream as a never-ending chase, today’s dream is much more closely aligned with the traditional view of the dream of previous generations. Revised — and potentially even on pause — but not reversed, the American dream is now buoyed by American pragmatism rather than unbridled consumerism. Still defined first and foremost by financial security, the dream now includes a much greater emphasis on personal relationships — family, children and marriage. Despite current challenges, the U.S. is still perceived by its people as the land where the greatest opportunities exist to achieve success and happiness. The quest has become more challenging but the destination remains in sight.
Half of Americans Living Bill-to-Bill
Work — and the paycheck and benefits associated with it — is the linchpin holding together the
American dream. With the number of Americans collecting unemployment benefits in early February 2009 at its highest rate since 1982 (source: U.S. Department of Labor), few have cash reserves on hand
to cover monthly expenses in the event of a job loss. A disturbing 50% of Americans say they are only
one month — or only two paychecks — or less away from not being able to meet their financial obligations if they were to lose their job, and more than half of these, a startling 28% of the total respondents, couldn’t survive financially for more than two weeks. Unlike previous downturns, the current economic crisis is cutting across all socioeconomic and political groups; no generation, political party or racial/ethnic group is immune.
Personal Safety Nets Will Play a More Important Role
For many Americans, worries about their financial instability are intensified by weakening public
safety nets — and by inadequate levels of personal savings and insurance protection. Across all generations, eight in ten Americans say that having a personal safety net — made up of cash, savings
and protection products — will be more important this year than last. Despite this, nearly three-quarters of the public admit to not having adequate protection. With uncertainty surrounding the future viability of traditional social and corporate safety nets — Social Security, Medicare and defined benefit pension plans — three-quarters of Americans say they are taking steps to put their own personal safety nets in place. But only 35% of Americans are now confident that they will be able to go it alone — down slightly from 37% in November 2006 and 36% in 2008.
Most Lack Adequate Safety Net
Americans understand that a personal safety net should not just include a cash cushion to cover expenses for a period of several months. They also acknowledge that it should contain a broad range of protection and savings products such as health and life insurance, and retirement savings.
Currently, Americans’ count auto insurance (60%), health insurance (57%), life insurance (46%), homeowner’s insurance (45%), a retirement savings plan such as a 401(k) (40%), and cash on hand for 3 – 6 months (35%) as the top six components of their safety net. And among the top ten items that
The 2009 MetLife Study of the American Dream
consumers would most like to have in their safety net, most are insurance products — long-term care insurance, health insurance, life insurance, annuities — or conservative investments such as cash or bonds.
Americans Put a Premium on Protection
In this environment, Americans are putting a premium on protection and stability. Unlike 12+ months ago when consumers welcomed a moderate dose of risk in their portfolios, consumers are now eyeing more conservative investments and protection products for their safety nets.
Americans are also more interested in guarantees today than they were in years past. Eight in ten (80%) consumers now report that they favor stability over returns. And, despite tight household budgets, 68% are willing to pay more for financial and protection products if they come from a company that they trust.
Restoring Public Confidence in the U.S. Financial System
The majority of Americans expect the road to recovery to be a long one. Most predict that it will take one to five years for the country’s economy to improve, with 35% forecasting 1 to 2 years and an additional 34% saying 3 to 4 years. Almost half (49%) believe that the creation of new jobs is the action that will do the most to jump-start the economy, followed by the economic stimulus package (19%) (which had yet to be introduced, voted on and passed at the time this survey was fielded), and improvement in the housing market (10%). Increased consumer spending is seen as less important (7%).
More than half of Americans would like to see more government involvement in the U.S. financial system and believe that is the best way to restore public confidence. However, they want the government’s involvement to focus more on consumers (69%) and less on businesses (31%).
Call to Action for Policymakers
The recent economic downturn has been a wake-up call that taught Americans that, no matter how sophisticated they are, market returns are not guaranteed. Today, individuals are feeling a tremendous burden and a high level of anxiety at having to provide financial protection for their loved ones. However, without insurance protection, the average consumer cannot adequately and efficiently self-insure the risks they will face throughout their lifetime such as becoming disabled, needing long-term care or living beyond average life expectancy. Individuals are just not equipped to attempt to manage these risks on their own. They will either save too little or they will save too much. The latter, by the way, in a society in which 50% of its citizens believe they could not meet their financial obligations for more than a month if they lost their jobs, seems highly unlikely.
While there is no quick fix for the demise of the traditional corporate and social safety nets, MetLife believes that policymakers, insurers and employers all play an important role in revitalizing and establishing programs that can provide certainty in today’s uncertain world. MetLife stands ready to assist policymakers as they encourage individuals to “re-create” their safety nets in a way that replicates some of the powerful programs that were established in the past.
The full study report is available here:
http://www.metlife.com/dream
From Higgy's link (emphasis is mine):
The majority of Americans expect the road to recovery to be a long one. Most predict that it will take one to five years for the country’s economy to improve, with 35% forecasting 1 to 2 years and an additional 34% saying 3 to 4 years. Almost half (49%) believe that the creation of new jobs is the action that will do the most to jump-start the economy, followed by the economic stimulus package (19%) (which had yet to be introduced, voted on and passed at the time this survey was fielded), and improvement in the housing market (10%). Increased consumer spending is seen as less important (7%).
More than half of Americans would like to see more government involvement in the U.S. financial system and believe that is the best way to restore public confidence. However, they want the government’s involvement to focus more on consumers (69%) and less on businesses (31%).
IMHO, these are very important points. Though we keep hearing from the bankers and politicians (and the ignorant, blabbering idiots on CNBC -- Rick Santelli excepted) that propping up banks will somehow "fix" the economy, Joe Sixpack actually understands what's really going on. It's impressive to see that although the govt is trying to convince us that 1) propping up banks and 2) consummer spending are the key to "solving the crisis," the citizens actually understand what's really going on. It's great to see the sheeple are starting to finally wake up. We've been had.
We are being shafted. This "crisis" is being used as a last-ditch effort to take whatever buying power remains in the hands of middle-class America, and transfer it to those already at the peak of the pyramid (high-ranking executives, money managers, and connected politicians).
We need to stop allowing them to divide us with trivial, emotional crap -- Repub vs. Dem and conservative vs. liberal nonsense -- and understand that **we, the citizens, are all together in this.** If you are not in the top 1% of the wealthiest Americans, and if you are not a well-connected politician, you are one of US! We need to stand together to fight what they are trying to do to us.
Good points - also, trust is a big thing going forward. And keeping investment principle is more important than returns. Once biten, twice shy....
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Americans Place a Renewed Premium on Trust
In keeping with consumers’ new appetite for security comes greater demand for predictable returns and guarantees. Eight in ten (80%) of those surveyed report that they are now more concerned with guarantees and stability than they are with returns; among Silents and Boomers, the percentages opting for stability over returns climbs to 91% and 84% respectively. While only 17% of Americans have already rebalanced their investment portfolios to reflect heightened appetite for stability, an additional 33% plan to take this step as a result of the financial crisis.
The reputation of financial services organizations — like guarantees — is increasingly important to Americans as they build and/or reinforce their safety nets. More than nine in ten (91%) Americans agree with the statement “It is more important than ever to understand the financial health of the companies I do business with or am considering doing business with,” including 51% who strongly agree.
Despite budgetary pressures, 68% of Americans say they are generally willing to pay more for financial and protection products if they come from a company they trust. Two in ten (20%) Americans strongly support the idea of a “trust premium”; an additional 48% support it somewhat.
"More than half of Americans would like to see more government involvement in the U.S. financial system and believe that is the best way to restore public confidence."
One of the challenges we face as Americans is that our population does not study history in any depth
History shows that government involvement in the economy always makes matters worse and leads to unintended consequences
As long as we continue to think that the government is some benevolent big brother who will altruistically take care of us, we are doomed to being serfs for the 1% of the population that actually pull the power strings in America
My biggest worry is the "entitlement mentality" that has come to dominate people's thinking and decision-making. When faced with adversity, we now too often blame scapegoats or seek outside help instead of take measures to control our own financial destiny.
This attitude is most common among beneficiaries of government aid, but is remarkably frequent among middle income people. How many media pictures have we seen of long-term, well-paid job holders suddenly set adrift who instantly have a negative net worth. While working they saved nothing, maxed out their credit cards, and never prepared for a rainy day. Long ago people automatically kept a cushion for emergencies, many people budgeted, and credit cards were only issued by a few department stores. It seems we've bought into the advertisers' instant gratification line, and are unable to visualize and plan for our financial future.
Are you able to support this claim with facts?
There are plenty of examples to the contrary:
Seems to me, that every time the government makes a move to keep hands off the economy, some Wall Street types use it as an opportunity to wreak havoc.
The government is far from perfect. But I trust it more than I trust corporations. If government doesn't have the last word in the economy, the corporations will. (And, no, I'm not and advocate or "socialism" or anything close to it, just well-founded regulation.)
pri_dk - I wish I had a good answer for you - at this point I can't clearly identify the lines between government / banking / judicial system / corporations
the only rule that seems to apply is that if you are part of the elite or connected to them, there are no rules
you are implying that govt regulation is part of the answer - I would agree with you IF there weren't so many instances of the regulators blatantly ignoring warning signs - numerous people warned the SEC about Madoff (made off with the money, he did!) yet they turned a blind eye - several people are warning the CFTC about ilegal and manipulative short positions in the silver and gold markets yet the regulators fail to address their complaints
another point of discussion would be all of the Goldman Sachs executives who are now in power seats of international banking and government - a subtopic would be about corporate CEOs who move back and forth between govt positions and private positions - as a case study we might look and see who made the electrical power industry deregulation possible and what their connection to Enron was - repeal of Glass-Seagall Act enabled all the banking/investment games of the last decade which provided the banking lobbyists with lots of money for politicians who enacted more laws that benefited the banking industry ...
And who is the government representing these days? There are 42,000 lobbyists in Washington, D.C. everyday - are they working on your behalf?
I don't know all the answers but more govt doesn't seem to be a good answer to any of the questions that I have - now, its chore time ...
On one of these, I know a bit.. and your statement is inaccurate. This is the deregulation of the electrical power industry. We are still under the state of deregulation on power generation, and no rolling blackouts.., so what happened? The truth is not that the deregulation caused the problem, it is how the deregulation was done that gives a case study in governmental stupidity (and voters not reading what they were voting for - ie the text of the bill).
The electrical power deregulation bill had two wierd quirks written into it.
1) Electricity was to be bought on spot market on day - to - day contracts.
2) Electrical cost was to be determined by combination of cost of last generator on line and spot market price.
The authors of the bill thought that the spot market price would be best representative of the price. Nothing could be further from the truth. Spot markets are the most manipulated markets around, but they average out in the long term to what the value of power really is (Eventually the speculator has to sell what they bought - they are not holding for consumption). Take down a power generator and the spot prices shoot up. Long term contracts with power generators were explicitly forbidden by the deregulation bill. The way a long term contract work is by stating a delivery of 'X' megawatt-hours per hour over a period of 'Y' days-months-years for 'Z' dollars per megawatt-hour with a must deliver clause. The power generator would have to go out on the spot market to find the remaining power should they be unable to deliver the contracted amount. The power generator would have to absorb the difference in the contract price and the spot price. This forces power generators to keep their cheapest generators running full-out on line as much as possibly and keeping the most expensive ones on standby. Pulling a generator offline as an 'emergency repair' would cost the power generators because they would be bound by a long term contract and would have to find replacement power through either the spot market or their higher cost generators that were on standby.
The second clause in the deregulation bill allowed power generators to successively add cheap power generators as demand built up.. then at the last moment, add a very inefficient power generator. The way the bill was worded, the cost of the power would be considered as the cost of the last generated added.. for all of the units, even the cheaper ones. The authors of the deregulation bill assumed that power providers would not try to 'game' the bill and will add the cheapest power generators to the grid as demand increased.
Where Ex-Gov. Davis screwed up is when he tried to get around the spot market price restriction by having the state buy from the power generators and then sell to the grid using longer term contracts. He bought long 'multi-year' contracts for all the power needed during the time when the spot market prices had been manipulated up (bought the house at the peak of the market). He should have bought a mix of 1 week, 1 month, 6 month etc power contracts with mandatory delivery requirements. The longer contracts would stop the manipulation of the spot market, allowing the long term prices to also drop (long term tends to act like an EMA of the spot market), while avoiding a lock-in at the higher price. Ex-Gov Davis could then fill in the long term power purchases after the market stabilized. -- wonder why California's budget is so screwed up even though we have had record property tax and property sales tax revenue??.. take a guess.