U.S. Economic Confidence Falls to Lowest Since January

U.S. Economic Confidence Falls to Lowest Since January
Gallup's U.S. Economic Confidence Index averaged -27 for the week ending July 15, down four points from -23 each of the prior two weeks. This extends a gradual decline in confidence that has been underway since late May, when the index was at a four-year best of -16. The index was nearly this low a month ago -- at -26 in mid-June -- and now stands at the lowest weekly average since late January of this year.
The latest weekly average is based on 3,421 national adults interviewed as part of Gallup Daily tracking from July 9-15. This represents the first full week of interviewing after the government's July 6 jobs report was issued, showing weak job growth in June.

Both components of the index worsened in last week, with Americans' perceptions of the economy's direction falling most sharply -- to -23 from -18 -- the lowest for that component since January. Ratings of current economic conditions dipped to -30 from -27, similar to previous low readings as recently as June and March.

Last Week's Decline Driven by Democrats

Economic confidence fell nine points among Democrats (from +13 to +4), compared with a two-point drop among Republicans (-54 to -56), while independents' confidence rose slightly, from -30 to -27. Despite this, Democrats remain the most upbeat about the economy -- as is expected under a Democratic president -- while Republicans are substantially negative and independents fall roughly in between.

Part of the reason Republicans' confidence did not drop more last week may be that it has already tumbled quite steeply since May, from -38 to -54, at the same time that Democrats' -- and in particular independents' -- confidence was more stable. That GOP decline may reflect heightened politicization of Republicans' ratings of the economy as the November election nears, with Republicans increasingly viewing their ratings of the economy as commentary on President Barack Obama.

Bottom Line

Gallup's first full week of polling following the Bureau of Labor's lackluster unemployment report on July 6, found confidence again turning -- after having held on to improvements seen since mid-June.

One positive finding is that the immediate after effect of the report may already be fading. Gallup Daily tracking's three-day rolling averages showed a clear decline to -26 for July 6-8, compared with -19 in the three days prior, and a further decline to -29 by July 8-10. However, it has since rebounded to -23. While Americans' economic mood was relatively glum last week, it is unlikely to get worse this week and thus far, at least, seems to be mildly improving. Still, confidence remains quite negative, and below the level that Gallup has determined may be necessary for President Barack Obama to achieve re-election-friendly job approval ratings.
From: http://www.gallup.com
Updated: July 17, 2012