For many, economic recovery still feels far off

Allison Linn Senior writer • Profile • E-mail

Sally Ly feels like she did everything right.

The 29-year-old went to college at University of the Pacific in Stockton, Calif., living frugally and using student loans that she figured would more than pay for themselves down the road.

Two years ago, Ly decided to leave the private sector to take a job as an analyst with the state of California, reasoning that job security and benefits outweighed a higher salary.

When she and her husband bought a house in Sacramento, Calif., they put 20 percent down and didn’t take equity out during the real estate boom. They rarely used credit cards and relied on a savings account for big expenses.

“We were just living conservatively, with the goal to pay (off) our house,” Ly said.

But like millions of other Americans, the Great Recession has thrown Ly’s plans into disarray. She and her husband, who also works for the state as a manager , have seen their salaries cut amid forced furloughs. That’s left them struggling to pay the mortgage on a house that is now valued at perhaps half the $425,000 they paid for it, and increasingly reliant on credit cards and their savings account for everyday and one-time expenses.

Recently, she said they were told that they had been denied for a home loan modification because they make too much money.

“I read that the economy is turning around and it didn’t do anything to change my mood,” she said recently.

For many Americans, optimism about the country’s economic future has been dampened by frustration, fear and anger. That’s largely because millions of them are still feeling the wrath of the recession, including job losses, reduced salaries, housing woes and increased debt.

A year after the financial crisis prompted the government to take unprecedented steps aimed at stabilizing the economy, for some people it’s also been exasperating to watch the government provide billions in aid to banks and auto companies while they’ve struggled to go it alone.

Others, like Ly, find it frustrating to see that people who bought houses they couldn’t afford, or who took equity out of their homes during the boom to buy nice furniture or fancy cars, are now eligible for government aid.

“I feel like all the irresponsible people, they’re getting all the attention and they’re getting all the help,” said Ly.

Less panic, but not necessarily more optimism
Sean Snaith, an economics professor and forecaster at University of Central Florida, said he is seeing signs that economic conditions are not nearly as dire as six months or a year ago. Still, with the economic recovery expected to start out slow and weak, he said it makes sense that many Americans will be apprehensive.

“This thing is not going to end as the next Great Depression,” Snaith said, “but I think that removal of that weight of fear and panic is not the same thing as renewed optimism.”

Snaith, like many economists, also believes that the unprecedented government intervention over the past year likely helped keep things from getting worse. But he said there’s no concrete way of measuring how those moves affected regular people’s everyday lives.

“There’s understandably a sense of, ‘Where’s my share of this, other than the portion of the national debt that falls on my back?’” Snaith said.

Andrew Pham, 28, is frustrated that the programs he thought would help him didn’t.

Pham is underwater on his mortgage and has been working since February to get the payments modified under a government program. He said so far he’s had no luck.

Meanwhile, the West Hollywood, Calif., resident recently traded in his Honda Accord but found that the mileage was too good to qualify for the Cash for Clunkers rebate program. Although the movie studio he works for has suffered in this recession, he doesn’t expect that it will get the type of aid the auto industry received.

“For people like me, middle-class people working to use these programs, they aren’t working,” Pham said.

For some, recession breeds determination
Even as some are feeling beaten down by the recession, others say the struggles they’ve gone though over the past year have actually given them a sense of determination.

On the day before Christmas Eve, Armando Avila lost his job after the bank he was working for, Wachovia, was taken over by Wells Fargo as it teetered on the brink of failure.

The job loss came in the same week that Avila and his wife closed on a new home, which they had bought out of foreclosure and which was in need of major repairs.

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