Economic Confidence Slips in July, for Second Month in a Row

Economic Confidence Slips in July, for Second Month in a Row
Gallup's Economic Confidence Index averaged -26 in July, a decline from -22 in June, and close to the 2012 low of -27 measured in January. Economic confidence improved during the first five months of the year, but July marks the second monthly decline in a row. Still, the index remains significantly higher than the -42 from July of a year ago.

Gallup's Economic Confidence Index consists of two measures -- one assessing current U.S. economic conditions and the other assessing the nation's economic outlook. Americans were more pessimistic about both current conditions and the economic outlook during July. Fourteen percent of Americans said the economy is excellent or good, while 42% considered it poor, resulting in a -28 current conditions rating. The -23 economic outlook rating reflects a five-percentage-point decline from June, with 36% of Americans saying the economy is getting better and 59% saying it is getting worse. This is the lowest economic outlook rating of 2012.

Confidence Lowest Among Republicans

Republicans' and independents' confidence declined, while Democrats' remained steady in July. Confidence among Republicans was -54, a five-point decline from June and their most negative monthly average of 2012. Independents dropped four points to -30, tied for the group's lowest monthly measurement since January. Democrats were unchanged from June at +7, up somewhat from -3 in January but still down compared with most months of 2012.

Bottom Line

U.S. economic confidence wavered during the month of July, likely because of several factors, including another tepid jobs report from the U.S. Bureau of Labor Statistics on July 6, and a mid-month report of lower-than-expected GDP growth. This, combined with little positive news on the domestic front and Europe's continuing economic troubles, likely resulted in the July decline in confidence.

Americans will need positive economic signs, such as the decline in unemployment seen earlier in the year, for the index to regain the positive momentum it had during the first part of the year. Politics may also be playing a role. For the index to significantly improve, Republicans will need to have a more optimistic outlook on the economy. However, with the ongoing presidential campaign, there may be little immediate chance of narrowing the partisan gap.
From: http://www.gallup.com
Updated: August 7, 2012