Economic funny business

The latest NYT/CBS News poll, just out tonight, shows that 81 percent of respondents believe “things have pretty seriously gotten off on the wrong track,” up from 69 percent a year ago and 35 percent in early 2003. This latest dissatisfaction is unusual because public opinion usually hits its low point months after an economic downturn, not at the start of one. But here's the really strange part: More than 70 percent said their financial situation was fairly good or very good, only a modest drop since 2006. Now if we're truly in a recession - and it's as bad as some economists say - why would most Americans be satisfied with their own situation? Because they're not out of a job or on the verge of having their house foreclosed. Translation: Things may not be as bad as they seem. Granted, the case against contraction is tenuous at best - and it might be out the window by the time the March employment report is released tomorrow morning. In fact, new claims filed for unemployment benefits shot up to 407,000 last week, which is over the 400,000 level generally considered to be recession land. Thing is, a few die-hard economists are dragging their heels. From Mark Gongloff in the WSJ:

The Institute for Supply Management's national manufacturing index has fallen to about 48, a level indicating the factory sector is slightly shrinking. But the ISM says the index needs to fall to about 41 to indicate a broader recession. Consumer spending, 70% of the economy, was nearly flat, when adjusted for inflation, in the first two months of the year. That's not good, but it might not be bad enough to turn first-quarter gross-domestic-product growth negative, especially with a weak dollar propping up exports. Such indicators keep hope alive that a recession can be avoided. The incoming fusillade of monetary and fiscal stimuli could knock an incipient recession out before it takes root, the optimists say.

Gongloff says "it's hard to imagine how the combination of the greatest housing collapse since the Great Depression, a broad credit-market seizure and sustained $100 oil prices wouldn't cause at least a mild recession." So here's the question: If things are so rotten, why are so many Americans in decent economic shape?