Many people are unsure of the work the stimulus has created thus far.

A new study is showing that Americans are losing confidence because they see debt relief as a far off dream. According to a Washington Post/ABC News poll of 1,000 people, “Overall, 52 percent now say the stimulus package has or will succeed in restoring the economy, down from 59 percent two months ago.” Experts are saying that consumers are watching the economy and their personal finances closely to see signs of resilience. Logically, it’s the states that were hit hardest by the economy whose residents are the most pessimistic about the stimulus.

The effect of the stimulus

Part of the problem with the stimulus is its seeming lack of saturation to the personal level. Although the stimulus was $787 billion, the majority of the money is still working its way through large industry giants and corporations. It hasn’t yet reached the hiring level, where people would see the biggest advantage. Vice President Joe Biden said, “150,000 of the 3.5 million jobs that are supposed to be saved or created under the program are in place.” Most Americans, hearing these numbers, are despondent, rather than satisfied. Claire Montage of Hollywood, Calif., stated, “One hundred fifty thousand jobs is nothing compared to the millions of jobs needed. … I’m not going to get excited about less than a 10th!”

Montage’s sentiments are shared by the population. With a recent projection of the unemployment rate estimating to be well over 10 percent in upcoming months, many people are unimpressed with the work the stimulus has created thus far. People are reading signs and not seeing the huge changes the stimulus promised.

People want everyday changes to become apparent

Dr. John Fieldling, psychologist for Moser College, stated, “People do not believe what they can’t see. And, they can’t see many signs of a recovery, no matter how the media writes about it.” Mentality is everything with the public, and it would be difficult for them to believe that things are getting better when they are still struggling with unemployment, debt relief, making payments and finding extra cash. The lists of things that people are mentally focusing on are largely untouched by the stimulus. Stimulus money may be helping large corporations restructure, but homeowners aren’t seeing the immediate benefits.

The Obama administration wants to find some consumer support and confidence. However, that’s a difficult task. Economist Larry Rudd stated, “People are not going to take well to hearing about large corporations recovering…they want to be able to pay bills and see prices come down in the supermarkets. They want everyday changes to become apparent.” This is the key to gaining support. If the Obama administration is to gain consumer support, it will take time. There has to be enough time for the stimulus to work its way through the layers of the market and reach the consumer level. Rudd added, “It will take time for visible signs of recovery.”

Economic recovery

Consumers are losing their confidence because of the growing unemployment rate, prices of goods and consistent problems with debt relief. Their everyday struggles are compatible with a negative assessment of the economy and its lack of growth. In turn, that contributes to a negative assessment of the stimulus. Only time will tell whether or not consumers will change their views of the stimulus, but one thing is for certain — until they see the actual changes, people won’t be satisfied.

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Keep Loans in Check

The unemployment rate is still high, and people continue to lose homes after failing to meet mortgage payments. Credit card debt also eats into their finances, leading them to borrow even more money from lenders. However, there still are people who have good jobs with better than average wages, no credit card debt or personal loans, and are looking for help in restructuring their finances. They have enough retirement and emergency savings, but they are worried that certain expenses may lead them into an undesired situation. These are not people who are looking for personal loans, but rather, they are trying to stay out of debt, but do not know what to do. Managing money is a skill that even those with extremely large salaries, such as executives or even actors, may not know how to do.

An Example

An example of this has been reported in the Washington Post (12/27/2009). The story starts out by profiling a couple, who are both federal employees who have saved nearly $160,000 towards their retirement and continues to contribute $1,700 a month towards this fund. They have one child as well. But they worry consistently about a large, but still affordable, mortgage payment each month, as well as a student loan of $22,000. Apart from that, they say they have a habit of dining out regularly, which takes a big chunk of their income. While they have thought about cutting down on their retirement contributions to finance their habit of dining out and keeping up with their mortgage payments, they realized that both options are unviable and they have sought counseling to see what can be done about their condition.

What a Situation to Be In!

Here is a couple who has everything they ever need in life, including a good job, a nice home, decent cars and all the luxuries. However their current debts are not such that they cannot be handled, as all they need to do is make some minor adjustments in their daily habits. Yes, they must give up on some of the luxuries and impulsive habits that they had developed over the years, which will mean more cooking at home rather than going out to eat. The money they save can go towards the student loan that they have. They could even cut down on certain other expenses that they may be indulging themselves in. A reduction in the contribution they are making towards their retirement is certainly not an option, as this is the last place they need to skimp on. What will happen if they get to retirement age, and all they have is enough to barely eek out an existence? Getting a personal loan that age would perhaps be a monumental task with higher interest rates. Instead, they could look at a loan modification for their mortgage and seek lower payments. As they have a good income coming in every month, a personal loan is not recommended. The problem they face is not the same that many others face, and they are not among the millions who are looking for loans from lenders, but rather, they have problems managing the money they have.

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