U.S. Economic Confidence Steady Amid Fiscal Uncertainty

U.S. Economic Confidence Steady Amid Fiscal Uncertainty
Americans' economic confidence held steady last week as U.S. lawmakers continued to negotiate how to avoid the so-called "fiscal cliff." Gallup's Economic Confidence Index was at -15 for the week ending Dec. 16, essentially unchanged from -16 the week prior and in the same general range that it has been for the past five weeks.

U.S. economic confidence has been moderately higher since the week ending Oct. 28, compared with the weeks from June until then, and the current weekly score remains one of the best of the year. The best two measures of 2012 came in the week before and after the U.S. presidential election, at -10 and -11, respectively. While that bump was not fully sustained, Americans' confidence has remained in the higher range, from -12 to -16, over the past five weeks amid the ongoing federal budget negotiations, suggesting some resilience amid uncertainty.

Currently, 17% of Americans say economic conditions in the country today are excellent or good and 38% say they are poor, for a current conditions score of -21, similar to the -20 of last week. Forty-three percent say the economy is getting better, while 52% say it is getting worse, for an economic outlook score of -9, little changed from -11 last week. The economic outlook component is responsible for the majority of the decline in the overall index score in recent weeks. Both components are down compared with early November but up compared with the summer months and this week a year ago.

Republicans registered a measurable increase in their economic confidence last week, to -54 from -62, as House Speaker John Boehner engaged in talks with President Barack Obama to reach a deal that would balance Republicans' preference for spending cuts with the president's preference for higher tax rates on the wealthiest Americans. Over the same period, independents and Democrats became slightly more negative in their economic confidence, offsetting the improvement among Republicans. Nonetheless, Republicans' economic ratings remain far more negative than Democrats' and independents', as they have been throughout President Obama's term.

Bottom Line

Americans are holding on to their current views of the economy as the president and leaders in Congress wrangle over the specifics of a federal budget that will no doubt affect many Americans no matter what they decide. This is despite the fact that the majority of Americans think it will harm their personal financial situation and the U.S. as a whole if the fiscal cliff tax increases and spending cuts go into effect.

The steadiness in economic views over the past five weeks is likely the combination of various factors. Americans may simply be waiting to see the result of the negotiations before adjusting their views on the economy, as the majority expect to see a resolution before the Jan. 1 deadline. Alternately, they may have already factored this debate into their economic assessment, balancing it with other economic and political news.

Whatever the reason, it may be a good sign that economic confidence has not deteriorated more amid the highly publicized fiscal cliff talks. Still, it is likely these views will break out of their current holding pattern if leaders strike a deal -- or if they do not. Americans' economic views post-fiscal cliff will either build or erase the gains seen in late 2012 and set the benchmark for economic attitudes in 2013.
From: http://www.gallup.com
Updated: December 18, 2012