U.S. Economic Confidence Up Modestly

U.S. Economic Confidence Up Modestly
Gallup's U.S. Economic Confidence Index increased slightly to -19 for the week ending Oct. 7, up from -21 the week prior but little changed from the previous four weeks, during which it has hovered within a narrow range of -18 to -21.

Although the U.S. Bureau of Labor Statistics reported a decline in the unemployment rate Friday, economic confidence did not improve in Gallup Daily tracking interviewing conducted Friday through Sunday and, at -21, was actually lower than readings earlier in the week.

The slight increase in economic confidence last week was the result of a modest improvement in both components of the index: one that assesses current economic conditions and the other that assesses the nation's economic outlook. Fifteen percent of Americans say the economy is excellent or good, while 41% consider it poor, resulting in a -26 current conditions rating, up slightly from the previous week.

The -12 economic outlook rating also reflects a slight increase over the previous week, with 42% of Americans now saying the economy is getting better and 54% saying it is getting worse.

Democrats and Republicans Remain Sharply Divided

Democrats and Republicans continue to be sharply divided in their perceptions of the economy, although both improved slightly over the previous week, to +25 and -57, respectively. Independents continue to have net negative views of the economy, at -24.

The polarization by party comes chiefly from opinions about the future of the economy. The majority of Republicans (81%) and independents (56%) say the economy is getting worse, while 74% of Democrats say it is getting better.

A minority of Americans say the economy is excellent or good, a measure on which all parties find common ground. Twenty-four percent of Democrats, 9% of Republicans, and 14% of independents report that the economy is excellent or good.

Bottom Line

The lack of improvement in economic confidence after the BLS jobs report may come as a bit of a surprise. However, the report was met with skepticism by many, as the consensus among economists was that the adjusted unemployment rate would be flat. This was in line with Gallup's employment data, which found unemployment to be unchanged on a seasonally adjusted basis in September. Despite the government's report showing modest job growth, Americans may not be feeling daily improvements in their economic situation.

Agreement across party lines as well as improved perceptions of the current state of the economy will be crucial to moving Americans' economic confidence from net negative to net positive. Although economic confidence has maintained its post-convention bump over the last five weeks, it is unclear at this point whether this will continue throughout the election season. Because of the sharp political divide, presidential election polling numbers may play a role in this: voters may report increased confidence if they suspect their favored candidate is ahead in the polls. Given the influence of Americans' political views on their outlook for the economy, it is possible that changes in the presidential race -- reflected in polls -- could influence voters' perceptions of the future of the economy.
From: http://www.gallup.com
Updated: October 9, 2012