But while Americans remain pessimistic about the prospects for dramatic improvement, most don't feel the economy is destined to take a nosedive either, perhaps one slightly comforting nugget in all the dismal data. A recent survey of financial professionals revealed that based on interactions with clients, more than 54 percent believe the economy will remain lodged in its current state of limbo.
"We're mired in a lot of uncertainty across the board and the results speak loudly to the fact that people feel like [the economy] is going to be the same, we're spinning our wheels," says Tim McPeak, senior analyst at Sageworks, Inc., which provides financial analysis on privately held companies. "Uncertainty breeds paralysis and until people have a clearer picture of where we are going, they're going to be less likely to make big decisions whether that's hiring, making capital investments in business, or making larger purchases."
So how do we break the cycle? One of the major criticisms leveled at President Obama's much-anticipated American Jobs Act is that it overlooks the housing crisis. While Obama floated the idea of working more closely with the Federal Housing Financing Agency (Fannie Mae and Freddie Mac's regulator) to facilitate more mortgage refinancing for struggling homeowners, some experts say the measures don't directly address the foreclosure and housing slump, which is often blamed for the drawn-out downturn in real estate.
A push for better access to refinancing options could give the housing market and the economy a small boost by potentially stemming the flow of new foreclosures, but with more than 3.5 million first-mortgage loans in or near foreclosure and more price declines likely, the outlook is grim.
"Most worrisome is the risk that housing will resume the vicious cycle seen at the depths of the last recession, when falling prices pushed more homeowners under water causing more defaults, more distress sales, and even lower prices," Mark Zandi, chief economist at Moody's Analytics, wrote in a recent report. "That cycle was broken only by unprecedented monetary and fiscal policy support."
While the Fed has promised to keep interest rates low for the next few years, more intervention from the central bank is uncertain. That leaves fiscal policy to pick up the slack, the specifics of which Congress and the President haven't been able to agree on. What is certain, experts say, is that further partisan bickering and backbiting will do nothing to improve consumer confidence, and may actually further undermine it.
That's a frightening possibility, especially in light of Americans' reduced spending and increased savings rates. Americans are pulling back and becoming increasingly risk-averse, according to ASR's survey—50 percent of respondents said they would not take any risks with their savings, compared with 40 percent two years ago.
"People have been up against this headwind for two years and it's starting to darken the whole mood," Bowers says. "America is known for being a great entrepreneurial society, the land of opportunity. This is about people going back into their cabin, shutting the door, and hunkering down. This is about survival mode."