Economy

Weekly Economic Wrap: Consumer Mood Up Last Week

by Frank Newport

Gallup economic indexes round-up for the week of March 16-22

PRINCETON, NJ -- Gallup's Consumer Mood Index had its most positive showing since mid-September 2008 last week, continuing an upward trend that began the week before. At the same time, there was no improvement in either Gallup's Consumer Spending Index or its Net New Hiring Index, suggesting that while economic attitudes are becoming more positive, actual behavior has yet to follow.

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Continued Improvement in Consumer Mood

The upswing in consumer mood continues a trend that began the week of March 9 -- the week during which the Dow Jones Industrial Average began to make a significant upward shift. Gallup's Consumer Mood Index improved to -91 during the week of March 16-22 -- up sharply from -116 two weeks before, March 2-8. Gallup Poll Daily tracking results from this past week showed that optimism about the economy was quite stable on a day-to-day basis, suggesting that a plateau on this measure may have been reached for the moment. Of keen interest will be the direction of the trend going forward. Will Americans continue to become more optimistic, or will pessimism creep back into the public's thinking?

Consumer Spending at Lowest Level Since January 2008

Gallup's Consumer Spending Index shows no signs that the improved psychology about the economy is beginning to pay off in actual behavior. Americans' self-reported spending in stores, restaurants, gas stations, and online declined slightly for the third week in a row, dropping from $66 per day from Feb. 23-March 1 to $53 per day last week. This is the lowest weekly average Gallup has recorded since it first started tracking this measure in January 2008. The high point for 2009 so far has been a $71 daily spending average in mid-January. A year ago, for the week of March 17-23, 2008, spending was at $68 per day. The week of May 26-June 1, 2008, saw the highest weekly average spending, at $131 per day, since tracking began.

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Financial Worries Increase Slightly

The percentage of consumers saying they worried about money "yesterday" increased slightly last week compared to the week before, returning to the range where it has been since the beginning of the year. Gallup's Financial Worry Index was at 37 last week -- indicating that, on average, 37% of Americans across the seven-day period of March 16-23 said they worried about money "yesterday." The Index stood at 36 a year ago.

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Standard of Living Unchanged

Gallup's Standard of Living Index was essentially unchanged last week at 39, compared to 37 the prior week and 38 the week before. Still, the current Index value is well below the 62 of a year ago.

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Net New Hiring Shows No Significant Change

Gallup's Net New Hiring Index showed no major change compared to recent weeks, with the Index continuing to show a pattern of very slight fluctuations between -4 and -6 since the end of January. The readings on this Index, which is based on the perceptions of large samples of employed Americans as to whether their companies are hiring or laying off, have in recent months been much lower than during the similar period in 2008. At the beginning of January 2008, the Index was at 28, and a year ago at this time, it was still well into positive territory (i.e., more companies hiring than firing) at 22. The Index has been negative since mid-December of last year.

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Commentary

Gallup's Consumer Mood Index for March 16-22 showed an increase in positive attitudes about the economy for the second straight week, and remains on a relative basis much more positive than it was earlier this year or late last fall. The current Mood Index value is in fact as positive as it has been since last September, when the current economic crisis intensified.

At the same time, it's important to realize that these are relative improvements, compared to a baseline of very negative numbers. Currently, many more Americans continue to rate the U.S. economy as "poor" rather than "excellent" or "good," and the ratio of those thinking the U.S. economy is getting worse rather than better is still well over 2 to 1.

Additionally, there has been no uptick in the two Gallup indexes that are designed to measure real-world behavior: self-reported consumer spending and employees' perceptions of their companies' hiring and laying off. It can be assumed that these are trailing measures, and that it will take time before more optimistic attitudes translate into actual spending and/or companies beginning to hire in great numbers. Until they do, of course, the improvement in consumer outlook represents a promise, rather than a reality.

Survey Methods

Gallup's attitudinal economic measures are based on aggregated interviews with a nationally representative sample of more than 12,000 adults, aged 18 and older each month. For results based on these samples, the maximum margin of sampling error is ±1 percentage points.

Interviews are conducted with respondents on land-line telephones (for respondents with a land-line telephone) and cellular phones (for respondents who are cell-phone only).

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

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