Improved Outlook Pushes U.S. Economic Confidence Back Up

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The confidence Americans have in the economy, an important indicator of public opinion that effects the actual economy, especially consumer spending, is back on the rise again after a dip this summer, according to the latest Gallup poll on the subject.

Gallup’s U.S. Economic Confidence Index is up for the month of September over the summer, but the indicator shows that Americans continue to be less positive about the economy than they were in May and June.

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Gallup’s Economic Confidence Index started the year at a lower level after the fiscal cliff deal was reached at the end of 2012, but steadily improved into early February. The index fell sharply after federal budget sequestration cuts took effect in early March, but quickly recovered once again.

Americans’ confidence in the economy peaked in late May and early June. Since early June, Americans’ confidence in the economy has generally declined, “possibly due to increasing mortgage rates, mixed employment news, and U.S. stock-price volatility that came amid uncertainty over when the Federal Reserve would taper its bond-buying program,” Gallup concludes.

Gallup’s Economic Confidence Index is based on Americans’ ratings of current economic conditions in the U.S. and their assessments of whether the economy is getting better or worse. The three-point increase in the overall index over the past two weeks is solely due to Americans’ “rosier” economic outlook, Gallup says.

Last week, 42 percent of Americans said the economy is getting better and 53 percent said it is getting worse, for a net economic outlook score of -11, six points higher than the -17 in the week ending Sept. 1.

Seventeen percent of Americans rate current economic conditions as “excellent” or “good,” while 35 percent rate them as “poor.” That results in a -18 net current conditions score, identical to what Gallup found for the week ending Sept. 1.

While Americans remain more negative than positive about the U.S. economy overall, Gallup’s Economic Confidence Index is significantly better than it was five years ago, in the days immediately before and after Lehman Brothers collapsed and a global economic meltdown ensued that came to be called the Bush Great Recession.

Although Americans’ economic confidence has slightly improved over the past two weeks, there are several looming political and economic events that could negatively affect confidence, Gallup says, including volatile situation in Syria, debates in Washington over the federal budget and the debt ceiling, and the Federal Reserve’s decision on when and by how much to slow down its bond-buying program.

Survey Methods

Results for this Gallup poll are based on telephone interviews conducted Sept. 9-15, 2013, on the Gallup Daily tracking survey, with a random sample of 3,568 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia. For results based on the total sample of national adults, one can say with 95 percent confidence that the margin of sampling error is plus or minus 2 percentage points.

© 2013, Glynn Wilson. All rights reserved.

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