U.S. Economic Confidence Continues Post-Election Fade

U.S. Economic Confidence Continues Post-Election Fade
Gallup's U.S. Economic Confidence Index is at -16 for the week ending Dec. 9, down from -12 the previous week. Confidence is now the lowest it has been since the presidential election, but still high compared with most of 2012.

The decline in confidence comes even though the U.S. Bureau of Labor Statistics released a better-than-expected jobs report on Friday, showing a 0.2-percentage-point improvement in the seasonally adjusted employment rate. Still, confidence was -16 from Friday, Dec. 7, through Sunday, Dec. 9 -- similar to the weekly average.

The trend in Gallup's Economic Confidence index, based on more than 3,000 interviews conducted each week, is not as negative as Friday's Thomson Reuters/University of Michigan preliminary consumer sentiment index, which was at its lowest level in four months. Although Gallup's Economic Confidence Index declined last week, it remains significantly better than the -27 reading at the end of August. It will be important to see if Gallup's index continues to erode in the weeks ahead, or if the Reuters/University of Michigan index is higher when the final December estimate, based on a larger sample size, is released later this month.

Gallup's Economic Confidence Index consists of two measures -- one assessing current economic conditions and the other assessing the nation's economic outlook. Americans' economic outlook accounted for the slip in confidence this past week. Forty-two percent said the economy is getting better, while 53% indicated that it is getting worse, resulting in a net score of -11, down from -5 the previous week.

Eighteen percent of Americans say the economy is excellent or good, while 38% say it is poor, resulting in a -20 current conditions rating, statistically unchanged from -19 the previous week.

Bottom Line
Although Gallup's Economic Confidence Index declined last week, its -16 level remains one of the better readings of the year, and is considerably higher than it was in July and August. Since that time, Americans have become more positive about current economic conditions and the economy's outlook. Still, in recent weeks, perceptions of the economic outlook have become slightly more negative, while current evaluations have remained relatively flat.

Unemployment, as reported by the BLS, is currently at its lowest point since the recession started and, overall, the stock market has improved thus far in 2012. Americans may be feeling some improvement in their daily lives, but the economy still has much growing to do before it improves to pre-recession marks on key economic indicators. With the looming fiscal cliff, this future is somewhat uncertain, which may be contributing to the more negative post-election expectations about the economy. Still, the majority of Americans believe it is likely that President Obama and Congress will reach a budget solution before Jan. 1 to avoid the fiscal cliff, an outcome that could reverse the recent decline in economic confidence.
From: http://www.gallup.com
Updated: December 11, 2012