Americans Leery of Economy, Personal Finances in 2005

MINNEAPOLIS – Americans’ expectations for the U.S. economy in 2005 as well as for their personal financial well-being are down sharply from a year ago, according to a national Thrivent Financial survey. More Americans expect the U.S. economy in 2005 to worsen than grow better (37 percent versus 33 percent), a dramatic reversal from a year earlier when twice as many believed the 2004 economy would grow better than worse (47 percent versus 23 percent).

This overall pessimism is also found in Americans’ attitudes about their own family income and financial situation. Taking into account their income, savings and investments against financial obligations, some 44 percent say their families will not be financially better off in 2005 than in 2004, up from 38 percent a year earlier, while those expecting a better family economic situation dropped from 57 percent to 47 percent. This is the lowest level ever recorded in Thrivent Financial surveys going back to 1997.

In addition, the number of people expecting their income to decrease in the coming year doubled from a year earlier. Twenty percent expect their total family income to decrease, up from 10 percent a year ago, while only 38 percent expect it to increase, down sharply from the 51 percent recorded last year, again the lowest level ever recorded in Thrivent Financial surveys. (38 percent expected family income to stay the same; 1 percent were not sure).

“This survey shows a meaningful tempering of the enthusiasm we found in Americans’ economic attitudes last year. Now, many are feeling increasingly uneasy about their overall financial circumstances,” said Mark Simenstad, Thrivent Financial’s economic strategist. “This uneasiness may be a reaction to many factors in the economy – consumer debt is high, health care costs have jumped, interest rates are expected to rise, the dollar has lost value, and many Americans have already tapped available dollars through mortgage refinancing or home equity loans. Many are feeling financially squeezed and uncertain about the future.”

Those most apt to feel their 2005 financial well-being will diminish include those separated, divorced or widowed (56 percent), those who never attend religious services (53 percent), pre-retirees age 50-64 (49 percent), those with income of less than $35,000 (49 percent), females (47 percent) and Northeasterners (47 percent).

Demographic Differences
Women are considerably more negative than men about the direction of the U.S. economy. Forty-two percent of women think the economy will worsen in 2005, while 29 percent believe it will get better. By contrast, 38 percent of men expect the U.S. economy to improve in 2005 while 33 percent believe it will become worse.

Americans living in the Northeast are far more negative about the economy compared to people in other regions of the nation. Forty-seven percent of Northeasterners believe the U.S. economy will be worse in 2005, compared to 38 percent of Southerners, and 33 percent of both those who reside in the Midwest and the West.

Twenty-eight percent of Americans having income of $75,000 or more expect their income to decrease in 2005. This compares with 20 percent of those with income of $35,000 to $74,999 and 19 percent of those with income of less than $35,000.

“While many factors influence our economic futures, we know that those who plan and set financial goals are usually more confident,” said Simenstad. “Careful planning can help all Americans make the most of their finances and protect themselves against changing financial circumstances.”

Telephone Interviews were conducted for Thrivent Financial by Quinley Research, Claremont, Calif., between November 29 and December 5, 2004, among a nationwide sample of 1,002 U.S. adults aged 18 and older. The margin of error for questions posed to all 1,002 respondents is +/- 3 percent.

About Thrivent Financial for Lutherans
Thrivent Financial for Lutherans is a not-for-profit Fortune 500 financial services organization helping nearly three million members achieve their financial goals. Thrivent Financial and its affiliates offer a broad range of financial products and services including life insurance, annuities, mutual funds, disability income insurance, bank products and more. Thrivent Financial and its affiliates have $65.9 billion (Sept. 30, 2004) in assets under management. As a not-for-profit organization, Thrivent Financial sponsors national outreach programs and activities that support congregations, schools, charitable organizations and needy individuals. For more information, visit www.thrivent.com.