How a country copes with a brutal economy depends in no small part on how well its people maintain their confidence in their own personal financial future. Will consumers be confident enough to spend? Will investors be confident enough to buy? Will employers be confident enough to hire?

Managers might also need to consider ways to bolster employee optimism, particularly if their company is forced to lay off workers and cut pay. That’s because, as Fred Luthans and other management scholars have found, confidence and hope tend to make workers more productive.

As economic conditions worsened during 2008, U.S. workers’ confidence in their economic futures also declined, according to Gallup (see figure 1). In January 2008, 60 percent of employees felt that their standard of living was improving. By October, when the extent of the financial meltdown was becoming clear, that figure had dropped to 39 percent; in October and November 2008, employed Americans were more likely to say their standard of living was getting worse than to say it was getting better.

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