US Economic Confidence Down, but Still Positive

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The FINANCIAL — Americans are slightly less confident in the U.S. economy than they were in late January, but they remain positive overall. Gallup’s U.S. Economic Confidence Index averaged +7 for the week ending Feb. 12.

The latest weekly average is similar to the prior week’s +8 index reading, but these are down from weekly scores averaging between +10 and +14 in January.

Around President Donald Trump’s inauguration last month, the index reached highs not seen before in Gallup’s nine years of tracking economic confidence. Although the index has dropped several points in the first half of February, it remains higher than most of the readings Gallup has recorded since 2008.

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.

Americans remain just as upbeat as they were in late January about current economic conditions, but they are now less optimistic about the economy’s future.

The current conditions score for the week ending Feb. 12 was +13, similar to the +12 to +14 weekly scores since mid-January. This was based on 32% of Americans rating the economy as “excellent” or “good,” and 19% rating it as “poor.”

Last week’s economic outlook score was +1, similar to the prior week’s +2 but much lower than the +13 scores in each of the last two weeks of January. The latest score was based on 47% of Americans saying economic conditions in the country were “getting better,” and 46% saying they were “getting worse.”

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The drop in Americans’ economic outlook is due to a decrease in optimism among Democrats and independents. Compared with their outlooks for the economy in late January, Democrats have become much more negative about the economy’s future (from -28 in late January to -41 last week). At the same time, independents have fallen into negative territory on this component (from +14 in late January to -5 last week), according to Gallup.

Republicans, who largely prompted the recent increase in overall economic confidence, have maintained their newfound optimism.

Bottom Line

Americans are just as positive as they were in January about current economic conditions in the U.S., but their optimism for the economy’s future is flagging. This change in optimism has occurred mainly among Democrats and independents, while Republicans remain optimistic.

This imbalance can perhaps be remedied by continued progress in gross domestic product growth, low unemployment and gains in the stock market. If positive signs such as these aren’t visible to Americans, it could further chip away at their economic outlook.

 

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