Chapter 2: Economic Indicators and Public Perceptions

Economic Indicators
The Numerical State of the U.S. Economy
Public Perception of the Economy

Because the U.S. economy is so large and complex, it is difficult to assess its overall health at any given time. Economists use a variety of numerical measures to analyze and track macroeconomic factors, such as employment and production. These economic indicators are widely broadcast in the media and are the subject of much analysis by leaders in government, industry, and the financial markets. The American public tends to gauge the health of the economy based on other factors, including their own personal and community-wide experiences and expectations.

Economic Indicators

Economists gauge the strength of the economy using data on wages, spending, saving, unemployment, and the production and consumption of goods and services. Some of these data are called economic indicators, because they provide key information about the macroeconomic condition of the country. One example is the National Income and Product Accounts compiled by the U.S. Bureau of Economic Affairs (BEA) under the U.S. Department of Commerce. The U.S. Census Bureau, the U.S. Department of Labor, and some private organizations also publish key economic indicators. (See Table 2.1.)

Three of the most important and telling economic indicators are the gross domestic product, the consumer price index, and the unemployment rate.

Gross Domestic Product

The gross domestic product (GDP) measures in dollars the total value of U.S. goods and services newly produced or newly provided during a given time period. It is calculated and published by the BEA and is one of the most important and accurate ways the government tracks the health of the economy. The GDP can be calculated in different ways. One method is the expenditure approach. It sums all the spending that takes place during a specified time period on final goods and services that are newly produced or newly provided. The components of this calculation are:

• Consumption—the amount spent by consumers on final goods and services. This includes food, clothing, household appliances, and so on, and payments for medical care, haircuts, dry cleaning, and other types of services. One major item not included in this category is the purchase of residential housing, which is considered an investment, rather than a consumption expense.
• Investment—this category has three components. One is the amount spent by businesses on assets they will use to provide goods and services (e.g., new machines and equipment, warehouses, software, and company vehicles). Also included are changes in the value of business inventories. This amount can be positive or negative. Residential housing is the third component of the investment category.
• Government expenditures—the amount spent by the government (local, state, and federal) on final goods and services. This category does not include transfer payments to the public (such as Social Security and unemployment compensation) because these expenditures do not represent goods or services purchased.
• Net exports—the difference between the value of U.S. exports and imports. In other words, net exports equal the amount that foreigners paid for American goods minus the amount that Americans spent on foreign goods. If the United States exports more than it imports, this value will be positive. If the country imports more than it exports, this value will be negative.

It should be noted that the GDP counts only the final value paid for goods and services, not the value of intermediate transactions. For example, the value of steel sold by a steel company to an automaker is not counted. The value of the car made from the steel is counted when the car is sold in the marketplace. To be counted in the GDP, a product must be new. The sales of used items are not included.

COMPARISON WITH THE GROSS NATIONAL PRODUCT. Before 1991 the U.S. government used an economic indicator called the gross national product (GNP) to measure U.S. productivity. The GNP was calculated the same way that the GDP is calculated today, except that the GNP included the contribution of U.S. production in foreign countries (e.g., an American-owned factory in Mexico). The GDP includes only production occurring within the boundaries of the United States.

NOMINAL VERSUS REAL GDP. Economists refer to GDP values as being nominal (based on current dollar values) or real (based on inflation-adjusted dollar values). Consider a simple example in which a nation's only production is one thousand identical new cars produced and sold each year. Assume this nation suffers from inflation, meaning that the price charged and paid for each car increases each year. A graph of this nation's GDP would go upward, indicating that production increases each year, while actually it is just the price of the cars that is increasing.

To remedy this problem, economists adjust the actual GDP values (nominal values) to account for inflation. The adjusted values are called real GDP values. They are useful for comparing GDP changes over time. Figure 2.1 shows real GDP values for the U.S. economy from 1929 through 2007. These values were calculated assuming that a dollar had the exact same value over time—the value it had in 2000.

Figure 2.2 shows the annual percentage change in real GDP from 1997 to 2007. Real GDP was up by 2.2% in 2007, down slightly from 2.9% in the previous year.

Consumer Price Index

The consumer price index (CPI) provides a measure of price changes in consumer goods and services over a

specific period. Each month the U.S. Bureau of Labor Statistics (BLS), a division of the U.S. Department of Labor, calculates the purchase price of a fixed “basket” of thousands of goods and services commonly purchased for consumption by U.S. households. These purchases are divided into eight major categories:

• Food and beverages—at-home and away-from-home consumption
• Housing—includes rent of primary residence or owners' equivalent rent
• Apparel
• Transportation—includes insurance payments
• Medical care
• Recreation—includes pet expenses
• Education and communication—includes computer software
• Other goods and services—haircuts, cigarettes, funeral expenses, and so on

The basket price includes sales and excise taxes paid on goods purchased. Payments for income taxes and investments, such as stocks and bonds, are not included.

An index is a useful tool for comparing changes over time. The index for the basket price for a selected time period is arbitrarily set to one hundred. This is the reference index. All other basket prices are compared to the reference index using this equation: index = (basket price/reference basket price) × 100. Therefore, a graph of CPI data over time does not show the actual prices paid for the baskets but a series of index numbers useful for determining price changes. Figure 2.3 shows the average annual CPI from 1913 through 2007. It uses the time period of 1982 through 1984 as the reference time period for which the CPI value is arbitrarily set to one hundred.

Percent changes in price between two years can be determined based on the difference in index values. For example, according to the BLS, in Consumer Price Indexes (March 14, 2008, ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt), the average CPI was 113.6 in 1987. By 2007 it had risen to 207.3—a difference of 93.7 index points. Dividing 93.7 by 113.6 and multiplying by

100 provides a percentage difference of 82.5%. On average, prices increased by 82.5% over this twenty-year period.

The data presented in Figure 2.3 are for urban households. According to the BLS (November 30, 2007, http://www.bls.gov/cpi/cpifaq.htm), the urban CPI (CPI-U) represents the buying habits of approximately 87% of the U.S. population. The BLS also calculates a CPI for urban dwellers employed in clerical or wage occupations, which are a subset of people included in the CPI-U. This subset represents approximately 32% of the U.S. population. Besides the national average, the BLS publishes CPI data for specific regions of the United States and for dozens of metropolitan areas.

CALCULATING AVERAGE ANNUAL INFLATION RATES FROM THE CPI. Price inflation can be defined as the increase in price over time of a fixed basket of goods and services. Thus, the CPI provides economists with a tool for quantifying inflation rates. The percent change in CPI from year to year is the inflation rate for that year. Figure 2.4 shows the annual average inflation rate for the U.S. economy for each year between 1915 and 2007 based on CPI-U data. In Consumer Price Indexes, the BLS states that the average CPI-U for 2006 was 201.6, and for 2007 it was 207.3. The inflation rate was ([207.3-201.6]/201.6) × 100 = 2.8%. This means that, on average, the price of consumer goods and services increased by 2.8% between 2006 and 2007. It also means that the purchasing power of a dollar went down over that time. For example, an item that cost $1.00 in 2006 cost nearly $1.03 in 2007.

In general, annual inflation rates of 2% to 3% are considered signs of a healthy growing economy where demand slightly outpaces supply. Larger inflation rates can be worrisome. The U.S. economy has suffered from double-digit inflation rates due to the effects of the world wars and during the 1970s and very early 1980s. Deflation (the lowering of average prices) occurred during the 1920s and 1930s.

CALCULATING ANNUAL INFLATION RATES ON A DECEMBER-TO-DECEMBER BASIS. The average annual inflation rate increase of 2.8% from 2006 to 2007 does not give the complete picture of price behavior during

2007. Another way to look at annual inflation rates is on a December-to-December basis. The BLS indicates in Consumer Price Indexes that in December 2006 the CPI-U was 201.8; by December 2007 it was 210. These values provide an annual inflation rate of ([210-201.8]/ 201.8) × 100 = 4.1%. This increase is higher than the increase calculated on an annual average basis and more accurately represents the price pressures faced by consumers in the marketplace during 2007. From a macroeconomic standpoint, the December 2006 to December 2007 inflation rate of 4.1% was higher than “normal” for a “healthy” economy.

Unemployment Rate

The U.S. government calculates the nation's unemployment rate for a given time period by dividing the number of unemployed people by the total labor force (unemployed plus employed people). The employment status of people is determined based on responses by the public to a monthly government survey called the Current Population Survey (CPS). The CPS is administered by the Census Bureau for the BLS. According to the BLS, in “How Is the Unemployment Rate Related to Unemployment Insurance Claims?” (March 4, 2004, http://www.bls.gov/cps/uiclaims.htm), the survey is administered to more than sixty thousand households per month.

The BLS counts people as being unemployed if they meet all the following criteria:

• Do not have a job
• Have actively looked for work in the previous four weeks
• Are currently available for work

The BLS does not consider active-duty military personnel or institutionalized workers (such as prison inmates) to be in the labor force. In addition, some Americans are neither employed nor unemployed under the BLS definitions and thus are not in the labor force. The most obvious examples are patients in long-term care facilities and retirees. Many students and stay-at-home parents also fall into this category.

Figure 2.5 shows the U.S. unemployment rate from 1925 through 2007. For years through 1945, the rate is calculated based on people aged fourteen and older. Because of the passage of child labor laws, the unemployment rate for years following 1945 includes only people aged sixteen and older. The unemployment rate soared during the Great Depression, reaching nearly 25% in 1933. More typically, it has ranged between 3% and 8%. During the early 1980s the unemployment rate was nearly 10%, its highest rate since the 1930s. Since 1995 is has hovered between 4% and 6%, which is generally considered to be a reasonable range for a healthy economy.

Critics believe that the BLS data are not representative of the nation's actual unemployment rate, because the data do not include people who become discouraged and quit actively looking for work.

The Numerical State of the U.S. Economy

Government and industry statistics on the state of the U.S. economy are released with varying frequency. Some economic indicators are published monthly, whereas others are published quarterly. Three government agencies—the BLS, the BEA, and the Census Bureau—publish updated economic indicators regularly.

The BLS: Unemployment, Wages, and Prices

The BLS publishes U.S. Economy at a Glance, which includes the latest statistics gathered by the agency on unemployment, wages, prices, and other economic factors. Table 2.2 shows the latest data available at the end of April 2008.

The unemployment rate in April 2008 was 5%. (See Table 2.2.) The rate had dropped slightly from March 2008, when it was 5.1%, but was up from 4.7% in November 2007. Comparison with the historical unemployment chart in Figure 2.5 shows that the rates for November 2007–April 2008 are moderate rates for post-depression America.

The BLS (April 25, 2008, http://www.bls.gov/ces/) also tracks changes in nonfarm payroll employment and average hourly earnings. These data are based on monthly surveys conducted of 150,000 businesses and government agencies as part of the agency's Current Employment Statistics program. Approximately twenty thousand jobs were lost in April 2008. (See Table 2.2.) Even larger losses were reported in the first three months of 2008—seventy-six thousand jobs lost in January, eighty-three thousand jobs lost in February, and eighty-one thousand jobs lost in March. New jobs were added in November and December of 2007. The average hourly wage for production and non supervisory workers was $17.88 in April 2008, up slightly from November 2007 when it was $17.64. Note that some data in Table 2.2 are considered preliminary and may change after further analysis by the BLS.

The CPI increased by 0.2% from March 2008 to April 2008. (See Table 2.2.) This value was down slightly

from the previous month, and relatively low compared to the changes reported from November 2007 to January 2008.

There are three other indexes reported by the BLS:

• Producer price index (PPI)—a family of indexes that measure changes over time in the selling prices received by the makers and providers of goods and services. The PPI has risen dramatically over the past two decades from its reference value of one hundred in 1982. (See Figure 2.6.) The PPI increased by 0.2% between March and April 2008. (See Table 2.2.) PPI values can differ from CPI values because of factors such as taxes and distribution costs.
• U.S. import price index (MPI)—indicates monthly changes in the prices of nonmilitary goods and services imported to the United States from the rest of the world. The MPI increased by 1.8% between March and April 2008. (See Table 2.2.) The BLS also tracks an export price index as part of its International Price Program.
• Employment cost index (ECI)—tracks quarterly changes in nonfarm civilian business labor costs based on a national compensation survey. It includes wages, salaries, and employer costs for employee benefits. The ECI increased by 0.7% from the fourth quarter in 2007 to the first quarter in 2008. (See Table 2.2.)

Finally, the BLS includes in U.S. Economy at a Glance a measure of national productivity (or efficiency). This number is a quarterly estimate of the change in output per hour of nonfarm businesses. It is calculated by comparing the amount of goods and services produced with the inputs that were used to produce them. According to the BLS, productivity was up 2.2% in the first quarter in 2008, compared to the fourth quarter in 2007. (See Table 2.2.)

The BEA: GDP, Income, Savings, and Profits

The BEA publishes Overview of the Economy, which includes the latest agency statistics for the GDP, corporate profits, personal income and savings, and other economic factors. It should be noted that until they are dubbed “final,” these statistics are estimates and are frequently revised by the BEA as new data become available.

REAL GDP. Figure 2.7 shows the quarterly changes in real GDP for the second quarter in 2004 through the first quarter in 2008. Real GDP grew by only 0.6% during the last quarter of 2007 and the first quarter of 2008, based on preliminary estimates. These values represent a substantial downturn from previous recent quarters. In the press release “Gross Domestic Product: First Quarter 2008 (Advance)” (April 30, 2008, http://www.bea.gov/newsreleases/national/gdp/2008/pdf/gdp108a.pdf), the BEA reports that the growth slowdown in the first quarter in 2008 real GDP was primarily due to decreases in residential fixed investments and consumer spending on durable (long-lasting) goods and to an increase in U.S. imports. Positive factors included consumer spending on services, business investments in inventory, U.S. exports, and federal government spending. Overall, real GDP grew by 2.2% during 2007.

NOMINAL GDP. The BEA reports that nominal GDP (GDP in current dollars) was $13.8 trillion in 2007. A breakdown by component is detailed in Table 2.3 and shown graphically in Figure 2.8. Personal consumption expenditures (PCE) accounted for 67% of positive GDP during 2007. This is consumer spending on goods and services. Services accounted for more than half of PCE, totaling $5.8 trillion. Medical care was the largest single service component, accounting for nearly $1.7 trillion of the total. Housing costs were the second largest component, at nearly $1.5 trillion. Spending on nondurable goods, such as food, clothing, and so on, amounted to $2.8 trillion, or 19% of positive GDP. Durable goods expenditures totaled nearly $1.1 trillion, or 7% of positive GDP.

Private investments totaled $2.1 trillion in 2007 and accounted for 15% of positive GDP. (See Table 2.3.) More than half of this total was devoted to nonresidential (business) investments in structures, equipment, and software. Residential fixed investments totaled $640.7 billion. The contribution from the change in private inventories was $2.9 billion.

Government spending and investment amounted to nearly $2.7 trillion, or 18% of positive GDP. (See Table 2.3.) State and local governments accounted for more than half of this total. Net exports were a negative contributor to the GDP during 2007, because the value of imports ($2.4 trillion) was greater than the value of exports ($1.6 trillion).

PERSONAL INCOME AND SAVINGS. The BEA also tracks changes in personal income and its disposition. Personal income includes wages and salaries (the largest component), wage and salary supplements (e.g., employer contributions to private pension funds on behalf of employees), rental income, proprietors' income (earned by entrepreneurs, small businesses, and farmers), and interest and dividend income. Most of the data are based on private and government payrolls. In the press release “Personal Income and Outlays” (June 27, 2008, http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm), the BEA notes that personal income increased by 1.9% in May 2008. This was a major increase compared to changes recorded in the previous four months.

Disposable personal income (DPI) is the amount of income received by people after taxes are subtracted. In other words, the DPI is the income available to people for spending or saving. According to the BEA, the DPI increased by 5.7% in May 2008, compared to 0.4% in April 2008. Personal savings (DPI minus personal outlays) was $555.7 billion in May 2008, up from $39.7 billion in April 2008.

CORPORATE PROFITS. The BEA reports in the press release “Gross Domestic Product: Fourth Quarter 2007 (Final)” (March 27, 2008, http://www.bea.gov/newsreleases/national/gdp/2008/gdp407f.htm) that corporate profits from current production decreased $52.9 billion during the fourth quarter 2007 after decreasing by $20.5 billion the third quarter.

The Census Bureau: Housing Starts and Home Sales

A high rate of homeownership is considered a positive sign of financial health by the U.S. government. As such, the Census Bureau tracks two important indicators in this area: housing starts and home sales. Housing starts is the number of new housing units (or homes) that have been started over a particular period. According to the Census Bureau, approximately 690,000 single-family homes were started in April 2008. (See Figure 2.9.) This value is down from more than 1.8 million homes started in early 2006. In general, monthly housing start numbers increased steadily through early 2006 and then plummeted. Sales of existing and newly built single-family homes plunged at around the same time. (See Figure 2.10.) This signaled a significant downturn in the real estate market.

Public Perception of the Economy

According to the government's various economic indicators, the overall condition of the U.S. economy is good. In reality, the state of the nation's economy is a reflection of the financial condition of the hundreds of millions of individuals and businesses that contribute to it. Thus, economic conditions at the national level can be

quite different from those experienced by people at the regional and local levels.

Regional and Local Economies

Part of microeconomics study involves the economic health of various geographical regions and communities. A regional economy can be an area as small as a neighborhood or as large as a group of states with climate, geography, industry, or culture in common. The relative

strength of a regional economy reflects broader national trends. For example, in the late nineteenth and early twentieth centuries—with the economy of the American South in shambles after the Civil War—northern cities attracted millions of workers to their rapidly growing industrial centers, such as the steel mills of Pittsburgh and the car factories of Detroit. Later, as the population migrated elsewhere, this region became known as the Rust Belt. Similarly, in the late twentieth century, western states experienced substantial growth with the rise of the computer industry, thanks in large part to Microsoft, which is headquartered in Seattle, Washington, and the dot-com companies centered in California's Silicon Valley. Other major economic regions of the United States include the Farm Belt of the Great Plains and the Sun Belt states of the South and Southwest, with warm climates that make them popular tourist destinations and strong agricultural regions.

When a region or community experiences a serious economic downturn—such as that which happened in the

upper Midwest, when the auto and steel manufacturers started losing ground to foreign competitors, and in the Farm Belt, with the rise of agribusiness and the subsequent demise of the small family farm—its citizens often fall into a cycle of unemployment and poverty, leading federal and local governments and private nonprofit organizations to step in to offer assistance.

The Role of the Individual in the Economy

Almost every aspect of American life is influenced by, and further influences, the economy. Whether a person drives or flies during his or her next vacation, how he or she will pay for college and save for retirement, what advertisements he or she sees, what movies he or she watches, and what magazines he or she reads all involve making economic decisions, which then affect the way the economy functions. If a person works or plans to work, that person is a small but important part of the economy. Likewise, every time an individual buys goods or saves money, he or she is participating in economic activity.

Economists maintain that the better off the economy is, the better its participants will be. In a healthy economy people tend to have more job security, earn more money, and are able to increase opportunities for themselves and their family—thus lifting their overall quality of life. However, in an unstable, bad economy—such as in the United States during the Great Depression and during recessions— people are less certain of the future, face increasing pressures at work and may lose their jobs, and have less flexibility in being able to pay for goods and services, which in turn affects trends in employment, interest rates, the cost of living, the money supply, and all other aspects of the economy, on both the macro and micro levels.

Public Opinion Polls

PROBLEMS FACING THE COUNTRY. The Gallup Organization is a U.S.-based firm that conducts frequent public opinion polls to gauge the mood and attitudes of the American people on a variety of subjects. In April 2008 Gallup asked Americans to name “the most important problem facing the country today.” Poll participants' first responses were recorded. The results are featured in Gallup Poll Social Series: Economy & Personal Finance (http://brain.gallup.com/documents/questionnaire.aspx?STUDY=P0804015). The most common first response was the economy. Nearly 41% of those asked named it as the nation's most important problem. The two next most common responses were the war in Iraq (13%) and fear of war (10%).

RATING THE U.S. ECONOMY. Since 1992 Gallup has asked poll participants to provide their assessment of the overall economic condition of the country by rating it as “excellent,” “good,” “only fair,” or “poor.” Table 2.4 shows the results of this survey for April 2008. Only a

small percentage of respondents (0.79%) rated the economy as “excellent.” A higher number (12.5%) described the economy as “good.” More than 40% said the economy was “only fair” and over 46% described it as “poor.”

In Consumers' Negative Attitudes Unchanged in Early May (May 15, 2008, http://www.gallup.com/poll/107290/consumers-negative-Attitudes-Unchanged-Early-May.aspx?), Lydia Saad of the Gallup Organization compares the results of surveys conducted on this same topic in January 2008 through May 2008. Saad lumps together the “excellent” and “good” responses. In January 2008 nearly an equal percentage of respondents described the economy as “excellent/good” (27%) or “poor” (28%). Over the following months, pessimism grew considerably. By May 2008 the percentage rating the economy as “excellent/good” decreased to 16%, whereas the percentage rating the economy as “poor” increased to 43%.

In the same polls the participants were asked to give their opinion on whether economic conditions in the country as a whole are getting better or worse. Saad indicates that in January 2008, 78% of those asked believed the nation's economy is getting worse. By May 2008 this value grew to 86%.

NATIONAL ECONOMIC MOOD. Gallup uses poll response data to calculate a value it calls an Economic Mood measure. People describing the economy as excellent or good and either staying the same or getting better are considered to have a “positive” mood. Those who believed the economy is fair or poor and either staying the same or getting worse are considered to have a “negative” mood. Other viewpoints outside of these two categories are considered “mixed.” According to Saad, 78% of those asked in May 2008 had a negative outlook on the economy, compared to only 7% with a positive outlook. Another 13% had a mixed outlook.

Saad notes that economic attitudes varied based on the family income and political persuasion of the poll respondents. Eleven percent of respondents making $7,500 or more per month had a positive outlook, and 73% had a negative outlook. By contrast, 5% of those making less than $2,000 per month had a positive outlook, whereas 83% had a negative outlook. There were large differences based on political party affiliation. Eighty-seven percent of Democrats and 81% of Independents had a negative outlook, compared to 62% of Republicans. Similarly, 15% of Republicans had a positive outlook, whereas 5% of Independents and 3% of Democrats did so.

PERSONAL FINANCIAL SITUATION. As part of Gallup Poll Social Series: Economy and Personal Finance, pollsters asked Americans to rate their financial situation as excellent, good, only fair, or poor. Only a small percentage (7.2%) of respondents gave an answer of excellent. (See Table 2.5.) More than a third (38%) rated their financial situation as good. Nearly as many (37.4%) felt it was only fair. Another 17.3% said their financial situation was poor. When asked if their financial situation was “getting better” or “getting worse,” nearly half (49%) of poll participants said their financial situation was getting worse. Close to one-third (32%) said their financial situation was getting better. Another 17% said their financial situation was staying the same.

Poll participants were asked to name “the most important financial problem” facing their families. First responses were recorded by Gallup. The ten problems cited most often were:

• Energy costs/oil/gas prices—14%
• None—13%
• Lack of money/cash flow—11%
• Costs of owning/renting a home—10%
• Health-care costs—10%
• High cost of living/inflation—10%
• Not enough money to pay debts—9%
• College expenses—7%
• Unemployment/loss of jobs—6%
• Retirement savings—5%

Gallup pollsters also asked people to indicate their level of worry about being able to “maintain the standard of living” they currently enjoyed. A quarter of respondents said they were very worried about that issue. Nearly 30% were moderately worried, and almost 24% were not too worried. Another 20% of respondents indicated they were not worried at all.

Dennis Jacobe of the Gallup Organization examines the standard of living poll results in detail in In U.S., Record Worry about Maintaining Standard of Living (April 25, 2008, http://www.gallup.com/poll/106831/US-Record-Worry-About-Maintaining-Standard-Living.aspx). According to Jacobe, the 55% of respondents indicating they were very worried or moderately worried about maintaining their standard of living was the highest percentage recorded by Gallup since the question was first asked in 2001. In that year 43% of respondents said they were very worried or moderately worried about maintaining their standard of living. The percentage varied over the following six years between 35% and 49%.

Jacobe notes that in April 2008 the greatest amount of worry on this issue was expressed by lower-income Americans. Nearly three-quarters (72%) of respondents earning less than $30,000 per year were very or moderately worried about being able to maintain their standard of living. By comparison, 58% of respondents making $30,000 to $74,999 per year and 41% of respondents earning $75,000 or more per year expressed a similar degree of worry.

SPECIFIC NATIONAL ECONOMIC CHALLENGES. In April 2008 Gallup conducted a poll asking Americans to rate specific national economic challenges on their seriousness. Respondents could use the following ratings:

crisis, major problem, minor problem, or not a problem. Forty-two percent of respondents rated rising gas prices as a crisis. (See Figure 2.11.) More than a quarter of poll participants considered the declining value of the U.S. dollar, rising health costs, and the housing market (including rising home foreclosures) to be a crisis. Twenty percent of respondents thought rising food prices, wages not rising to keep pace with inflation, and job losses were crises. Roughly half of respondents rated each of these economic challenges as a major problem in the country.