The FINANCIAL — Americans’ confidence in the economy remains relatively high as the presidential transition period continues.
Gallup’s U.S. Economic Confidence Index averaged +7 for the week ending Jan. 8 — down a bit from the prior week’s score of +11, the highest weekly average recorded since Gallup began tracking economic confidence daily in January 2008. Americans’ views of the economy have been slightly more positive than negative since the post-election surge in confidence in mid-November.
Before the presidential election in November, Gallup’s U.S. Economic Confidence Index remained consistently in negative territory (though at varying levels) in nearly all weekly measurements since 2008, except for a short string of slightly positive index readings between late 2014 and early 2015, according to Gallup.
The recent upswing in economic confidence was a result of a significant improvement in Republicans’ confidence after their party’s nominee, Donald Trump, won the election. Independents have also become more confident in the economy, though to a lesser degree. Whereas only Democrats were more positive than negative about the economy before the election, now Democrats (+6), Republicans (+17) and independents (+2) all have positive index scores.
Gallup’s U.S. Economic Confidence Index is the average of two components: how Americans rate current economic conditions and whether they feel the economy is improving or getting worse. The index has a theoretical maximum of +100 if all Americans were to say the economy is doing well and improving, and a theoretical minimum of -100 if all Americans were to say the economy is doing poorly and getting worse.
Both the current conditions and economic outlook index components were down slightly last week from +11 the previous week, which marked record-high scores for both components.
Last week’s current conditions score was +6, based on 29% of Americans rating the economy as “excellent” or “good,” and 23% rating it as “poor.” The economic outlook score was +7, based on 50% of Americans saying economic conditions in the country were “getting better,” and 43% saying they were “getting worse.”
Americans’ views of national economic conditions improved almost immediately after Trump’s election on Nov. 8 and have remained relatively upbeat in the weeks since. The improvement in Gallup’s U.S. Economic Confidence Index reflects a logical shift in how Democrats and Republicans view the economy during the presidential transition period. Republicans are currently more positive about the direction of the economy than they are about its present circumstances, while Democrats are more positive about current economic conditions than they are about the economy’s direction. Once President Barack Obama is out of office and Trump is in, it’s likely those attitudes will shift yet again.
Obama’s exit from the White House is likely to take a toll on Democrats’ confidence — particularly their perceptions of current economic conditions, which could cause the overall index to dip. But it’s possible that Trump taking office will continue to boost Republicans’ evaluations of the economy, which could balance out Democrats’ expected decline.
Aside from these partisan effects on economic confidence, other economic indicators suggest the economy is improving — though the pace of its improvement is unsatisfying to many. While the Bureau of Labor Statistics’ final monthly jobs report of 2016 showed slightly fewer jobs added than anticipated, the report marked the 75th consecutive month of job growth in the U.S. Meanwhile, workers’ wages in the past year grew at its strongest pace in over seven years. But despite these signs of progress, gross domestic product growth remains slow.
Americans’ economic confidence may be shifting under a new political order, but when the dust settles after Jan. 20, factors other than party identification will likely determine whether Americans become more or less confident in the economy in 2017.