More families financially stressed

The strains of job loss and higher prices show up in a poll. Optimism hasn't suffered though

In a region where growth often breeds optimism, families have not felt worse about their finances in many years.

A recent poll of more than 1,000 Carolinas residents reveals that only about one in 10 thinks his or her family is better off financially than a year ago. That 11 percent response is the lowest in the 28 years of the annual Carolinas Poll.

Four times as many people said they were worse off -- the most ever in the poll. The rest said their finances were about the same.

Gloom prevailed in other questions about the economy, such as whether the next five years will bring widespread unemployment or whether now is a good time to buy expensive household items.

Yet the downturn that has tested household budgets hasn't totally destroyed optimism.

When asked how their family finances will be a year from now, 31 percent said they expected to be better off, while 15 percent said worse off -- comparable to last year's responses.

The poll's margin of sampling error is plus or minus 3.1 percentage points.

Kari Matos, 31, of Charlotte said her hopes for a better future come from facing a very tough present.

A few days before her third child was born in early December, she said, her husband was laid off from his job as a truck driver and hasn't been able to find a good job since then.

"It's more wishful thinking than anything else," Matos said. "I do not in my head want to think that it can get any worse."

John Connaughton, an economist with UNC-Charlotte, said high gas prices -- and the effect on other costs, such as food -- have forced families to divert their discretionary income, "which is where the real satisfaction comes from."

"It has hit people in terms of their pocketbooks and what else they can do," he said. "It just makes them angry and mad."

Measure of confidence

Conducted for The Charlotte Observer and NewsChannel 36, the Carolinas Poll is used to calculate an Economic Confidence Index. The index is similar to the national Consumer Confidence Index, which gauges consumers' optimism. That's important because consumer spending drives about two-thirds of economic activity.

The Economic Confidence Index was set at 100 with the first survey in 1981. It was 95 the following year, during a recession that followed the oil and energy crises of the 1970s. That 95 reading remains an all-time low. The high was 156 in 1999, riding the dot-com boom not long before its bust.

At 96, this year's index is the second-worst -- down from 121 last year and 128 in 2006, and only the second time it's been below 100.

Part of the pessimism may come from many Carolinas residents experiencing years of growth and prosperity, only to see significant belt-tightening in the past year, said Tim Burson, an economics professor at the McColl School of Business at Queens University.

"We really haven't been hit hard by recessions," he said.

When asked what issue is the most important facing the nation today, 44 percent of respondents said the economy. That's about three times as many as said illegal immigration, health coverage for all Americans or the war in Iraq.

Yet Connaughton said, "I'd put the economy behind all of those." He attributed much of the concern among Carolinas residents to media coverage, saying there are more outlets reporting on the economy than during previous downturns.

Reasons for hope

Carolinians give various reasons for the expectation that their lot will improve in the next year. Gas prices have gone down since hitting an all-time high in mid-July, survey respondents noted, giving hope for some relief in household budgets. Some also are excited for change in the presidential election. Connaughton, however, said, "The presidency as an economic agent is really overrated."

The most hopeful were the youngest, with almost half of respondents ages 18 to 34 saying they expected to be better off next year, compared with 31 percent of all those surveyed. Only 8 percent of the young adults said they expected to be worse off.

As Jermaine Nichols, 34, an educational consultant in Charlotte, explained it, all bad times eventually end. "These things are cyclical," he said. "Eventually, people will get over the shock of gas prices and things that have happened with housing. ... As with anything, it becomes old news."

But, Nichols acknowledged, "I'm also a pastor. To some degree, I'm in the optimism business."