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Americans feeling better, not good

By Greg McBride, CFA · Bankrate.com
Thursday, December 22, 2011
Posted: 10 am ET

In my weekly appearance with Gary Goldberg's "Money Matters" radio program, we discussed Bankrate's December Financial Security Index and related economic trends. Here's a partial transcript of my comments:

In December, we actually saw a nice uptick in consumers' financial security. We're ending the year on a higher note than we've seen in the past few months. In particular, I think the drop in the unemployment rate (from 9 percent down to 8.6 percent) had a positive effect on consumers. Our December Financial Security Index poll was conducted the same weekend the jobs report came out, and nearly 2 out of 3 Americans that we surveyed this month said they have the same level of job security as they did a year ago, and those that feel less secure in their jobs dropped pretty significantly, from 28 percent in November down to just 18 percent in December.

We see big differences between people that are under age 30 and those that are over age 50. Those that are under 30 -- I wouldn't go as far as to say that they're optimistic, but they're certainly the least pessimistic of all the age groups. They tend to give higher marks in terms of their job security, how comfortable they feel with the savings they’ve accumulated and their overall financial situation.

But among those that are 50 and over, we see some marked contrasts. Among all age groups, they're the most pessimistic with regard to their own job security, they're the least comfortable with the savings they have, and they're most likely to say that their overall financial situation has deteriorated in the past 12 months.

Looking forward a bit, everything is revolving around Europe right now. And the odds of a European recession are still quite high. That's certainly not going to help the U.S. economy, but I don't think it's going to bring it to its knees, either, since Europe only makes up about 20 percent of U.S. exports. The bigger risk that we have -- and we're still not out of the woods on this one -- is that the European debt crisis produces some sort of global credit crunch. That's where we would have trouble and end up back in a scenario that could look a lot like 2008 all over again. That's what keeps me up at night.

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