Economic Confidence Index in the U.S. Consistent at -12

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The FINANCIAL — Gallup’s U.S. Economic Confidence Index is -12 for the week ending Dec. 13. This is consistent with the -11 score of the previous week and within the narrow -11 to -15 range it has occupied since September.

At the end of December 2014, the index increased sharply and reached positive territory for the first time since Daily tracking began in 2008. Scores stayed positive for about two months, before falling back toward an overall negative evaluation of the economy. Over the summer, the index fell further, dropping as low as -17 in late August. Since then, scores have stayed within a narrow four-point range.

Gallup’s Economic Confidence Index is the average of two components: how Americans feel about current economic conditions and whether they feel the economy is improving or getting worse. The index has a theoretical high of +100, if all Americans rate the current economy positively and say it is improving. It has a theoretical low of -100, if all Americans rate the current economy poorly and say it is getting worse.

For the week ending Dec. 13, 24% of Americans rated the current economy as “excellent” or “good,” while 30% rated it as “poor.” This resulted in a current conditions score of -6, the same as Gallup has found since November. The economic outlook score measured -18 last week, the result of 39% of Americans saying the economy is “getting better” and 57% saying it is “getting worse.” This is down slightly from the week prior, but within the range of recent scores.

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Bottom Line

If the U.S. Federal Reserve increases interest rates as expected this week, it could have a number of effects on U.S. consumers, including investors. Increasing interest rates could make certificates of deposit and savings accounts more attractive, but could also make borrowing money more expensive. The stock market will likely also respond to any interest rate hike, which could affect Americans’ economic confidence. These effects could, in turn, influence the scores on the index, either directly or indirectly. Most likely the Fed’s decision would influence Americans’ views of whether the economy is going to get better or worse.

 

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