Earlier this year, Fed Vice Chair Janet Yellen described the economic recovery as "painfully slow," and said that an "important tailwind in most economic recoveries is one that tends to be taken for granted--the faith most of us have, based on history and personal experience, that recessions are temporary and that the economy will soon get back to normal." This tailwind, she implied, was particularly weak. Here I've made two graphs that give an indication of the painfully slow recovery.
The Michigan Survey of Consumers asks respondents, "Compared with 5 years ago, do you think the chances that you (and your husband/wife) will have a comfortable retirement have gone up, gone down, or remained about the same?"
Before 2008, on average 45% of people would say that their chances of a comfortable retirement had stayed the same. About 28% would say their chances got worse, and 26% would say their chances got better. Figure 1, below, shows the percent of respondents who chose better or worse each month. By October 2008, only 11% of respondents thought their chances of a comfortable retirement were better than 5 years ago; 45% thought they were worse.
As of October 2012, the numbers are barely improved: 15% of people think their chances of a comfortable retirement are better than they were in 2007, and 41% think they are worse.
Figure 2 shows the percent of respondents in the highest and lowest income terciles who think their chances of a comfortable retirement are worse than 5 years ago. For the top income tercile, hit harder by falling asset prices, this number peaked at 62% in February 2009, and averaged 41% over 2012. For the bottom income tercile, hit harder by the deteriorating labor market, this number peaked later, at 56% in May 2011, and averaged 45% over 2012.
|Figure 1: Constructed with data from Michigan Survey of Consumers|
|Figure 2: Constructed with data from Michigan Survey of Consumers|