U.S. Economic Confidence Down Slightly Last Week

U.S. Economic Confidence Down Slightly Last Week
Gallup's U.S. Economic Confidence Index declined slightly to -19 for the week ending Oct. 21, from -17 the week prior. Despite the slip, this is little changed from the trend since the week of Sept. 3, when confidence significantly improved from one of the lowest points of the year.

The slight pullback in economic confidence last week was the result of a modest decline 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, down from -23 the previous week.

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

Democrats Remain Positive, Republicans Negative, Independents Hold Middle Ground

Both Democrats and Republicans saw a slight decline in confidence last week to 23 and -62, respectively, while independents improved modestly, to -20. Democrats and Republicans continue to be increasingly polarized as the election nears. The two parties have been sharply divided for all of 2012, with Democrats holding net positive economic views since the end of January and Republicans holding strongly net negative views, while independents have consistently held the middle ground.

The differences between Democrats and Republicans have become more sharply divided in recent weeks. An 85-point gap separated the opinions of Democrats and Republicans the week of Oct. 15, a significant increase in the difference between the two parties since early September, when the party divide was 67 points, but slighter lower than the gap of 89 seen a few weeks ago, the largest of the year. The improvements in economic confidence seen after the week of Sept. 3 are entirely the result of improved views of the economy held by Democrats, and to a lesser degree, independents.

Bottom Line

Perceptions of the economy continue to be largely driven by politics, which is not surprising given the political climate and variation in economic indicators. Some signs point to possible improvements in the economy such as a decline in unemployment rates -- reported by the U.S. Bureau of Labor Statistics and Gallup -- and expectations of increased spending during the holiday shopping season. However, other reports, such as the increase in unemployment claims released last week, paint a less optimistic economic picture. With contradictory economic reports and no major signs of positive economic momentum, Americans may be relying heavily on their political party's prescription for economic improvement.
From: http://www.gallup.com
Updated: October 23, 2012