Nobody under 40 really remembers it, but the recession around the middle of Reagan’s first term was really, really, really bad. It licked inflation, but at the cost of sky-high unemployment and the worst recession since the Great Depression. And even then the public’s view of their personal finances was rosier than it is now.

Many more people say that their finances have become worse in the last year rather than better, but that this result is probably quite misleading even if we are trying to compare the public’s mood about the economy today against the mood in the early ’80s.  If you own any equities, the last year has been rather ugly on the whole, and now that there are many more stockholders today as a percentage of the general population than there were in 1981 it is not hard to imagine that in a volatile market those stockholders would say that their finances have worsened.  Add to these the people caught up in the collapse of the housing bubble, and you will come up with a very large part of the population.  So there are a lot of Americans suffering from financial losses or anxiety about potential losses who were not exposed to risk in the same way in the early ’80s.  In a roundabout way, this is actually a testament to the success of the economic expansion over the past three decades, since it reflects in part how many more people are benefiting from, while also suffering from the risks of, participating in equities markets.   

Of course, electorally the recession of ’81-’82 was not very good for Republicans in Congress (they lost a net of 27 seats in the House), so as a matter of the political significance of the public’s view of their finances these numbers have to be deeply troubling to the GOP today.  This is all the more remarkable given that the economy has not yet gone into recession and may not do so.