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Thursday, April 21, 2011

Americans in Sour Mood

Americans’ economic confidence is down.

Right now, our Gallup Economic Confidence Index is at -39. That’s the lowest it has been since July of last summer. Confidence in the economy has essentially followed an inverse U-shaped pattern in recent months. Americans became more confident earlier this year. But beginning about the middle of February, confidence began to drop. The major driver of the lower economic confidence score is views of the direction of the economy. At this point, 69% of Americans say that the economy is getting worse, rather than better.

Americans' views of the job market, interestingly, are actually moving in the opposite direction. Our Job Creation Index and unemployment measures are more positive in general in recent weeks, albeit with some short-term ups and downs.

There are two ways of looking at this: It could be that consumer confidence will shift more positively once the full effect of increased hiring percolates through to consumers' consciousness. Or it could be that the jobs situation will deteriorate further as the effect of consumers’ more negative views become felt.

One might ask what's causing the downturn in economic confidence -- if it's not the jobs situation. One obvious answer is the price of gas, which keeps going up. Still, our update on what Americans perceive as the most important problem for April doesn't show a high degree of top-of-mind concern about gas prices, particularly when compared with previous time periods in which gas prices rose.

The most accessible economic numbers to most Americans -- in addition to gas prices -- is the Dow. And that is up, not down. So that's certainly not a cause for the downtick in economic confidence.

Who do Americans trust to handle the economy? My colleague Dennis Jacobe has written an interesting analysis of responses to the just that question. Among the "big three" political players, Obama does best, but not by a huge margin -- Obama is trusted a "great deal" or a "fair amount" to handle the economy by 50% of Americans, the Republican leaders in Congress by 44%, and the Democratic leaders in Congress by 41%. Americans are most trusting of their state governors. And, despite the low ratings of the honesty and ethics of business executives and the low confidence in big business as an institution, Americans have more confidence in business leaders to do the right thing for the economy than any of the big three political entities.

Meanwhile, using a different measure, we find that President Obama’s job approval ratings are flirting with their all-time lows. Obama's job approval rating was at 41% last Friday, tying his low. As of this writing on Thursday, April 21, his approval rating is at 42%.

Approval of Congress is at 17%. That's basically where it was last November. The short-term uptick in Congress approval in January and February -- after the new 112th Congress took office -- has totally dissipated.

Satisfaction with the way things are going in the U.S. is at 18%. Not a highly auspicious number.

The entire political debate going on now, while perhaps a positive representation of democracy in action from a broad view, is probably not adding to Americans' short-term confidence in their government and leadership. We have the highly public debates on the evils of the federal budget deficit and the cries of doom if nothing is done to narrow it. We hear negative prognostications about the future of the country economically speaking. These discussions may not be adding to Americans' confidence.


Anonymous said...
April 21, 2011 at 1:01 PM  

The answer to the conundrum is simple, I think -- Americans are being told that the economy is not getting better. And this has changed their opinion of the overall economy while not altering their opinion about its components, including jobs and the price of gasoline.

Realize it or not, we are in about month 12 of the 30-month 2012 re-election cycle.

The message selected by the president's opponents is 'American decline.' Gallup's suggests that this message has percolated into public opinion. The message, as shown above, is at odds with reality, and thus explains how the message could change opinions on the overall state of the economy but not its components.

It is important to remember that opinion polls not only measure opinions, but capture the effect of coordinated efforts to mold that opinion.

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