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.
Avila was able to find a new job in February as a loan officer for Countrywide, now Bank of America, which he likes more than his previous job. But that good news was tempered with bad when his wife lost her job in the construction industry. A month later, the couple found out that they were expecting their second child, due in December.
Avila, 25, admits that the past year has been hard, as the couple have dealt with both the emotional and financial impact of the job losses as they try to raise a young family. They’ve burned through savings and ended up with more than $45,000 in credit card debt, which they are now working to pay off.
The couple is determined not to let the recession drag them down.
“I know what’s going on. I’m not blind. It’s happened to us,” Avila said. “However, what are you going to do? Are you going to sit there and not move forward?”
The Madera, Calif., resident said he is frustrated about how the financial crisis has been handled. He’s also been irked to see so many people wallowing in the economic doldrums or looking to the government for help.
“Talk shows … will preach that the economy is getting worse and worse and worse, and I feel like they’re giving you a sense of not being able to recover,” he said. “You cannot look at your own country that way. That’s horrible.”
Others say that, as bad as things are, they still see a limit to how much they’re willing to give in.
Ly, the California state worker, said she was shocked recently when a friend told her she was considering walking away from her house. Despite her own financial worries, it’s a step Ly couldn’t imagine taking.
“There’s a pride to being a responsible person, to saying, ‘You know, I have a job, I’m careful with my spending, I wasn’t irresponsible,’” she said. “When you do all those things and you still fail at the end, for me, it would be — I think it would be disgraceful.”
Long-term repercussions
Nevertheless, many find it hard to shake the anger over being hit so hard by a recession that they feel was caused by others.
“You have no control over it. You get up and you go to work every day and you do your job, and you’ve done your job for years, and all of a sudden you’re getting a drop in pay,” said Jodi Frazier, 45, of Arvada, Colo.
Frazier's husband has had to take a pay cut because of the recession, and her two daughters are also struggling because of the economy.
Now, some say they have had enough. Steve Ebels has been a critic of the $700 billion bank bailouts since they were first announced nearly a year ago, and at this point he feels like he has little control over how his tax dollars are being spent.
That, in turn, is making him more wary of other government plans, such as health care reform.
“I think they may have come up against that line in the sand where the general public is going to say, ‘This far and no farther,’” said Ebels, 52, who runs a heating business in Falmouth, Mich.
Snaith, the economics professor, said there is a concern that the government’s aggressive response to the financial crisis will limit its ability to address other pressing financial concerns, such as Social Security and Medicare. He also worries that the sheer mass of problems is hampering officials’ ability to effectively execute the programs they already have, such as the $787 billion stimulus package.
“It’s just overwhelming when you think about the number of issues that we need to tackle in this country and this economy,” he said.
Mark Gertler, an economics professor at New York University who has previously collaborated with Federal Reserve Chairman Ben Bernanke, said his big concern now is that the government will not give enough attention to regulatory reform that would prevent the worst financial crisis since the 1930s from recurring.
“They have to set up new ground rules so that the banks can’t take advantage again, and if they don’t do that, we’re going to head right back into the same situation,” he said.