The economy is still in rehab, but it doesn't bother us all that much any more. In fact, we seem to be feeling nearly as good as we did before that awful recession messed everything up.
That's what Americans have been telling the Gallup polling organization—and the nation's mood suggests that the recession may have made us a wee bit heartier. We seem to be happier with less, for one thing, and we may even be getting more satisfaction out of the "little things" that took a back seat for a while to fancy cars, splashy homes, and tell-everybody vacations.
Gallup's "well-being index" shows that Americans felt more happiness and less stress in 2010 than they did in 2009, which isn't surprising, since 2009 was the year the economy hit bottom, unemployment surged, and the stock market hit a 13-year low. What is surprising is that the latest well-being numbers are comparable to those of February 2008—which was a high point before the nation's mood began to sour and then turn downright grim as the financial panic hit in the fall of that year.
Economic conditions in early 2008 were far better than they are now. The unemployment rate was just 4.8 percent, less than half of today's 9.8 percent. The Conference Board's consumer-confidence index was 76.4, compared with the latest reading of 52.5. The housing bust was just beginning, with few home owners worried about it. Lehman Brothers was still in business, and General Motors insisted it would never be forced to declare bankruptcy. And nobody had yet heard of TARP. By those kinds of economic measures, we're still far behind where we were in early 2008.
So why are we feeling just as content today as we did during better economic times? Maybe because we've changed our expectations and placed less importance on economic gain. Don't get me wrong: I'm not suggesting that utopianism trumps consumerism. But Americans do seem to be saying they can be just as satisfied in an austere economic environment as they once were in an indulgent one. In addition to economic factors, Gallup's well-being index also measures things such as the way people evaluate their own physical and emotional health, and whether people feel like they're struggling or thriving. And those metrics suggest that more people have learned to be happy under tougher economic conditions. The percentage of Americans who feel they're thriving, for example, is 54 percent in the latest survey. And the percentage who say they're struggling is 43 percent. Both of those levels are better than they were at the beginning of 2008, when Gallup began doing its well-being surveys.
The Gallup data clearly capture the distress caused by the recession. Beginning in April 2008—when gas prices were beginning their march toward $4 per gallon—the proportion of people who said they were struggling began to outnumber those saying they were thriving. The inverted gap between anxious and happy people was widest in December 2008, when the overall well-being index hit a low point.
[See who will prosper in 2011.]
Then, in April 2009, thriving people once again began to outnumber struggling people. That was around the time that the Federal Reserve's "stress tests" gave the nation's financial sector a shot of confidence, and shortly after the stock market bottomed out and a bull-market rally kicked off. And the recession officially ended just a couple of months later. Nobody knew that at the time, but Americans did begin to slowly regain their optimism in conjunction with gradual improvements in the economy. It's hard to draw a clear cause-and-effect relationship, but economic conditions and consumer sentiment usually tend to reinforce one another.
The curious thing is that consumer confidence, which focuses more on economic factors, has not recovered as much as Americans' overall sense of well-being. The latest readings in the Conference Board's survey, for instance, are comparable to levels in the summer of 2008, when it was clear that something was wrong. Bear Stearns had collapsed by then, and the mortgage agencies Fannie Mae and Freddie Mac were about to. The stock market had taken a sharp downward turn, and the housing bust was becoming a mainstream problem impacting the middle class. Consumer-confidence hit a low point in February 2009, shortly after the well-being index bottomed out, which makes sense. But since then, Americans seem to have become happier even though they still have a fairly gloomy economic outlook.
[See who will struggle in 2011.]
One explanation is that people are more upbeat when they feel things are getting better, regardless of how bad things were in the recent past. Additional data from Gallup may help explain what else is lifting Americans' spirits. Daily surveys show that the happiest days of 2010 were holidays spent with family (and not with co-workers): Christmas, Mother's Day, the Sunday before Labor Day, Independence Day, Thanksgiving, and Easter Sunday. That's typical, since socializing with friends and family tends to generate more enjoyment and less stress (cynical jokes about mothers-in-law notwithstanding) than being at work or dealing with midweek routines.
Americans were also less stressed about economic news in 2010. In 2009, the most stressful days tended to coincide with ghastly news about gargantuan layoffs, the risk of huge banks like Citigroup failing, and a plummeting stock market. In 2010, the most stressful days tended to correlate to disasters—but not economic ones. Well-being low points, for instance, came during the Midwest floods that forced thousands from their homes last September, the worst days of the BP oil spill, the pre-rescue days of the Chilean mining saga, and the most heart-wrenching moments of the tragic earthquake in Haiti. There was plenty of bad economic news in 2010—like the Greek and Irish debt crises, the foreclosure mess, and summer worries over a double-dip recession—but they didn't shake Americans' overall sense of well-being.
It's probably premature to conclude that Americans have rediscovered the frontier mentality or become rough-and-ready survivalists. But there is at least anecdotal evidence that some Americans are drawing more satisfaction from simpler—and cheaper—pleasures. If the price of happiness has gone down, maybe more of us will discover we can afford it.