[Public Opinion Briefing 68-1] Perceived Economy Hits Bottom Compared to Previous Year, Recognition Gap Between Income Brackets Narrows

[Public Opinion Briefing 68] Regular Public Opinion Barometer Survey

1. Perceived Economy Hits Bottom Compared to Previous Year, Recognition Gap Between Income Brackets Narrows

2. 2010 Outlook: High Expectations for National Economy, but Prospects Uncertain Across Sectors

Negative Perceptions of Perceived Economy Significantly Decreased Compared to February; Improvement in National Economy Recognition More Pronounced Than Household Economy

Polarization in Perceived Economy Significantly Reduced, Improvement in Perceived Economy Supports MB's Approval Rating

Perceived Economy Hits Bottom: Negative Perceptions Significantly Decreased Compared to February

National Economy Shows Significant Improvement: "Worsened Compared to One Year Ago" for Korean Economy Drops Sharply from 93.1% (February) to 36.2% (December)

Pessimistic Views on Household Economy Also Decrease: "Worsened Compared to One Year Ago" for Household Economy Decreases from 50.9% (February) to 33.1% (December)

[Figure 1] Changes in Perceptions of Household and Korean Economies Compared to One Year Ago: February and December 2009 (%)

Note: Don't Know/No Answer is not included in the figure. For the Korean economy perception question, Don't Know/No Answer was 0.1% in the February survey and 2.9% in the December survey. For the household economy perception question, Don't Know/No Answer was 0.1% in the February survey and 0.5% in the December survey. The February survey involved 1,000 respondents, and the December survey involved 800 respondents.

Comparing the survey conducted in February of this year with the one conducted on December 19th, it appears that the economic situation perceived by the public has at least hit bottom.

First, perceptions of the Korean economy have significantly improved. In the February survey, when asked 'How has the Korean economy changed compared to one year ago?', a staggering 93.1% of respondents (58.9% significantly worsened, 34.2% slightly worsened) answered 'worsened'. Only 5.4% responded 'similar level', and 1.4% (0.1% significantly improved, 1.3% slightly improved) responded 'improved'. In the December survey, pessimistic responses of 'worsened' dropped to 36.2% (8.3% significantly worsened, 27.9% slightly worsened), a decrease of 56.9 percentage points compared to February. Responses of 'similar level' were 46.5%, and 'improved' responses were 14.4% (1.2% significantly improved, 13.2% slightly improved). This appears to reflect the recent optimistic forecasts for the Korean economy released by the Korean government, IMF, and OECD, as well as the actual improvement in macroeconomic indicators at the national economic level.

It is also confirmed that perceptions of the household economy have improved considerably. In the February survey, regarding the question 'How do you assess the household economic situation compared to one year ago?', 50.9% of respondents (14.0% significantly worsened, 36.9% slightly worsened) felt it had worsened, while 43.2% responded 'similar level', and only 5.8% (0.5% significantly improved, 5.3% slightly improved) responded 'improved'. In the December survey, the response of 'worsened' for the household economy also decreased significantly to 33.1% (8.0% significantly worsened, 25.1% slightly worsened), a decrease of 17.8 percentage points compared to February. The proportion of responses indicating 'similar level' increased to 58.5% compared to February, and the proportion of responses indicating 'improved' remained at 7.8% (1.0% significantly improved, 6.8% slightly improved), similar to February.

It is true that evaluations of improvement in both the national economy and individual household economies compared to a year ago are still held by a minority. It is difficult to conclude that the economic situation perceived by the public has fully entered a recovery phase. However, considering the trend of decreasing negative assessments and increasing positive assessments of the national and household economies compared to ten months ago, it can be concluded that the perceived economy has at least hit bottom.

Recognition Gap in Economic Perceptions Between Income Brackets Narrows, Pessimism Regarding Household Economy Significantly Decreases Among Low-Income Earners

"Household Economy Worsened" Over 10 Months: Low-Income Earners Down 27.2%p, Middle-Income Earners Down 14.2%p, High-Income Earners Down 16.4%

Perceptions of Korean Economy Show Uniformity Across Income Brackets

The narrowing of the recognition gap in economic perceptions between income brackets, which reflects the level of socioeconomic polarization, is also a significant finding. Typically, a distinct gap in perceptions between income brackets is observed regarding the household economy, which more directly reflects individual and household economic conditions than the national economy. Reactions to economic shocks at the global and national levels may be uniformly observed across all income brackets. However, the impact of economic shocks on individual households and personal economic conditions can vary significantly depending on personal characteristics such as government policies, the individual's economic capacity, social networks, and credit, thus leading to a large gap.

Indeed, when comparing responses regarding the Korean economy across income groups categorized by monthly household income, there were no significant differences between the February and December surveys. In the February survey, the proportion of respondents who answered that the Korean economy had worsened compared to a year ago was uniformly high: 90.6% among low-income earners (less than 2 million KRW per month), 94.7% among middle-income earners (2 to less than 4 million KRW per month), and 93.9% among high-income earners. In the December survey results, responses indicating that the Korean economy had worsened decreased simultaneously across all income levels: 34.7% among low-income earners, 38.5% among middle-income earners, and 33.2% among high-income earners.

[Figure 2] Changes in Negative Perceptions of the Korean Economy by Income Bracket (February-December)



"Worsened Compared to One Year Ago" Response Rate (%)



Sharp Decline in Pessimistic Views on Household Economy Among Low-Income Earners; Smaller Declines in Middle and High-Income Earners

In contrast, there was a significant change in the perception gap regarding the household economic situation across income brackets. In the February survey, the proportion of respondents who answered that their household economic situation had worsened compared to a year ago was 63.9% among low-income earners and 50.1% among middle-income earners, but only 41.4% among high-income earners, indicating a substantial gap. This suggests that the impact of the economic shock on household economies was greater for low-income earners. However, this gap significantly narrowed in the December survey. Among low-income earners (under 2 million KRW per month), negative perceptions of the household economy decreased by 27.2 percentage points from February to 36.7%. Among middle-income earners (2 to less than 4 million KRW per month), it decreased by 14.2 percentage points from the previous month to 35.9%. Among high-income earners (4 million KRW or more per month), it decreased by 16.4 percentage points to 25.0%.

While negative perceptions of the household economy remain higher among lower-income groups in this survey, the recognition gap between low-income and high-income earners regarding the household economic situation has significantly narrowed compared to February. This can be seen as an indirect confirmation of the effects of the government's expansionary fiscal policies and various support measures for low-income individuals implemented since last year's economic crisis. Conversely, although negative perceptions of the household economy also decreased among middle and high-income earners, the extent of the decrease was less than that among low-income earners. This suggests that the effects of the government's policies aimed at 'revitalizing the middle class' and 'tax cuts' on the perceived economic improvement were relatively weak.


[Figure 3] Changes in Negative Perceptions of Household Economy by Income Bracket (February-December)


"Worsened Compared to One Year Ago" Response Rate (%)

Improvement in Perceived Economy Leads to Increased Presidential Approval

Higher Approval for MB When Household Economy is Perceived as Good: "Improved" Group 56.1%, "Maintained" Group 53.1%, "Worsened" Group 25.2%

Improvement in Household Economy Perception Among Democratic Party Supporters Also Acts as a Factor in Increased MB Approval Rating

The improvement in public perception of the economy appears to be translating into increased presidential approval. In fact, among the 62 respondents who answered that their household economy had 'improved' compared to a year ago in this survey, a remarkable 56.2% responded that the president was doing a good job in state affairs. Among the 468 respondents who answered 'similar level', this figure reached 53.1%, significantly exceeding the overall average of 44.1%. However, among the 265 respondents who answered that their 'household economy had worsened', only 25.2% responded that the president was doing a good job, acting as a factor that lowered the average approval rating.

[Figure 4] MB's State Affairs Approval Rating by Household Economy Perception (%)


Among Grand National Party Supporters, MB Approval is 81.1% When Household Economy Improves, 60% When It Worsens

Among Democratic Party Supporters, MB Approval is 40.9% When Household Economy Improves, 10.2% When It Worsens

One might argue that it is not that people who perceive their household economy as good have higher approval for President Lee Myung-bak, but rather that they responded positively about their household economy because they support MB and the Grand National Party. However, an analysis of the survey results shows that even among Democratic Party supporters, who tend to be strongly opposed to the Grand National Party and MB, those who positively assessed their household economic situation showed a higher tendency to approve of the president compared to those who did not. Among the 225 respondents who identified as Grand National Party supporters, presidential approval ratings were as high as 81.1% and 84.9% among those who responded that their household economy had improved or remained the same, respectively. However, among those who responded that their household economy had worsened, the approval rating was relatively lower at 60.0%.

Conversely, an analysis of the responses of 160 Democratic Party supporters shows that 40.9% expressed approval of the president's state affairs among those who responded positively about their household economy, falling to 27.5% among those who responded 'similar level'. Among Democratic Party supporters who perceived their household economic situation as worsened, the state affairs approval rating was only 10.2%. Ultimately, even considering political factors such as support for ruling and opposition parties, this suggests that the household economic situation influences the evaluation of the president. It can be inferred that these economic effects are contributing to the recent rise in the president's approval rating, which had been declining due to the deaths of two former presidents and the Sejong City controversy.

[Figure 5] Comparison of MB Approval Ratings by Household Economy Perception Among Grand National Party and Democratic Party Supporters (%)


"Very Well" + "Generally Well" Response Rate for Presidential State Affairs Management