Our troubled economy

Minnesota Poll: A nagging feeling of financial angst

  • Article by: KARA MCGUIRE , Star Tribune
  • Updated: October 7, 2008 - 7:44 AM

Ignoring the brokers assuring him he could obtain a larger mortgage, Mackey Harris and his wife were careful to buy a home in Minneapolis that they could afford. But today, with rising energy prices, his wife's pay cut and his unemployment due to injury, "I'm keeping the wolves at the door with a stick," said Harris, 51.

Like nearly half of the recent Star Tribune Minnesota Poll respondents who make between $30,000 and $75,000, Harris says his household finances are worse than they were a year ago. And about one-quarter in this middle-class bracket expect their financial circumstances to worsen over the next year.

"We're losing too many jobs everywhere," said Alice Houck of Atwater. Houck's hours packing candy have been reduced from 40 to 24 hours per week because orders have slowed, leaving the 56-year-old searching for a second job. Faced with rising prices, she is not expecting things to get better any time soon. "It's going to be hard. ... I'm hoping in the long run the election will give the working poor a break."

As the Wall Street credit crisis ripples worldwide, the Minnesota Poll found that 40 percent of Minnesotans feel their financial situation is worse off than it was in October 2007, when the credit crisis seemed like a Wall Street problem and the Dow Jones industrial average was sailing above 14,000 points.

This reflects what Minneapolis financial educator Cassaundra Adler is hearing. "It just seems like people are being pinched from all sides" by economic circumstances out of their control such as wage freezes, high food prices and declining home values. "There's this sense of just being stuck in mud," she said.

Still some optimism

Even so, Minnesotans are still slightly more optimistic than pessimistic about their financial future -- with 27 percent thinking their finances will improve in the next 12 months vs. 24 percent feeling their money situation is likely to get worse.

Take Duluth resident Brian Byer. "I'm out of school, doing what I love," said Byer, 35, a physician who just finished a residency program. He expects his income to continue to grow and says his finances are in "excellent condition."

Overall, 45 percent of the Minnesotans polled last week feel their finances are in "good'' to "excellent'' condition compared with 14 percent who answered "poor" and 41 percent "fair." Not surprisingly, the more money people make and the more education they have, the more likely they are to rate their financial situation as good to excellent.

Country is 'on wrong track'

But even some Minnesotans hopeful about their personal finances feel less confident about the state of the nation. Eight in 10 Minnesota Poll respondents said the United States has gotten "pretty seriously off on the wrong track." That's the highest percentage since the question was first asked in 1987 and two points higher than the previous "wrong track" record from 1992, another year of financial distress.

A handful of interviews with poll participants about the economic reasons why they believe the country is headed in the wrong direction pointed to the size of the federal deficit, a Wall Street bailout package perceived to benefit the rich, the widening gap between the haves and the have-nots and a troubled job market.

A CNN/Opinion Research Corp. poll conducted over the weekend confirmed this sentiment nationwide; it found 80 percent think things are going badly in the United States.

The Minnesota Poll of 1,205 Minnesota adults, with a margin of error of 3.5 percentage points, was conducted between Tuesday, Sept. 30, and Thursday, Oct. 2 -- as Congress was struggling with the design of a $700 billion bailout package.

Anger at Wall Street

When asked, 61 percent of Minnesotans said taxpayer dollars should not bail out failing financial companies. However, seven in 10 respondents in the last Minnesota Poll (Sept. 10-12) felt the government should do more to fix the economy.

Lucy Myer, 25, is against the bailout package because she thinks businesses and consumers need to start dealing with the financial consequences of the decisions they've made. "I think our country might need to go through a Great Depression. ... Everyone is living on credit," said the resident of Dakota, Minn., in Winona County.

Harris opposes the package because it is financial companies that "shot dice on houses," that benefit -- not the average Americans who deserve the help. "This bill could have put money back in the communities.... All we got was debt added onto the debt we have."

Even those in support of the package are wary. Byer, 35, was displeased with all of the projects tacked onto the final bill but "given that is seems to be a pretty dire emergency, it's probably the best route to go."

David Chalupnik, head of equities for Minneapolis-based First American Funds, blames the intense dislike for the rescue package on politicians who did a "horrible job marketing it" to the general public.

"It needed to be presented as an investment in your financial system and your economy," he explained. "Does it help Wall Street? Yes, it does, but it also helps the average consumer.... Today consumers are having difficulty getting loans to purchase a car and the car dealers are having a difficult time getting loans to purchase inventory. That helps nobody."

Trouble on Wall Street and the stock market's double-digit downturn has one in five Minnesotans feeling "scared," according to the poll. Another two-thirds felt concerned, but not scared by the problems facing the stock market and financial institutions.

Jill Ferris, of Andover, who works in an insurance agent's office, feels lucky compared with the clients who call her to cancel home insurance because of a foreclosure, and her two children, now in their 20s, who are struggling despite holding full-time jobs. "I'll never be able to retire. I don't think my husband will either," said the 53-year-old.

Concerns about how quickly the rescue bill will work on top of signs that we've entered a global recession put the Dow at 9,955 Monday -- below the 10,000-point psychological landmark for the first time since October 2004. It's off 30 percent from its Oct. 9, 2007, record close of 14,164.

Kara McGuire • 612-673-7293

  • about this series

  • The Star Tribune's coverage of the housing crisis, the credit crunch and their effect on Minnesotans.
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