PRINCETON, NJ -- Americans' optimism about the economy's direction has recently been as positive as at any point since Gallup began tracking it on a daily basis in January 2008; in August so far, an average of 40% of Americans say the economy is getting better -- exceeding July's average by seven points.
This uptick in consumer confidence seen in Aug. 1-12 polling has been accompanied by a modest decrease in ratings of the current economy as poor, but little change in Americans' willingness to give the economy excellent or good ratings. Gallup's measure of consumer spending also shows no significant increase this month. These data confirm the general pattern Gallup has observed in consumer confidence this year -- greater optimism about the direction of the economy appears to be out ahead of economic reality.
The uptick in consumer views of the economy's direction may result from factors that include the general upward slope in stock market indices, the publicity surrounding the successful initiation of the Cash for Clunkers program, and government reports showing that the economic recession may have bottomed out.
The recent history of this trend, however, shows that it has fluctuated a good deal, and it's possible that expectations could fall again. Gallup's monthly average of the percentage saying the economy is getting better was as high as 37% in May, only to drop to 33% last month before regaining momentum so far in August. In terms of the three-day average Gallup reports on a daily basis, the Monday through Wednesday number this week shows a small decline in the percentage saying the economy is getting better -- to 41% from the previous day's report of 43%.
Gallup's Weekly Economic Wrap next Tuesday will provide an indication of whether the upward trends to this point in August will continue.
Americans' ratings of the current economy this year have become less negative overall. The percentage rating the U.S. economy as poor has dropped from 57% in January to 46% so far in August. Most of this decline has been picked up by the percentage of Americans giving the current economy the lukewarm rating of "only fair." Importantly, there has been only a small increase in the percentage rating the economy as excellent or good, which was at 9% in January and 11% last month, and is 12% so far in August.
Consumer spending has not improved on a sustained basis in Gallup's measures all summer, a finding confirmed by recent reports that retail spending has been disappointing.
One proximate cause of the slow rebound in consumer perceptions that the economy is in excellent or good shape, and the lack of increased spending that might accompany this recognition, is the job market. There has been little indication from employed Americans that their companies are sharply increasing their hiring. Recent Gallup updates show that the number of American workers worried about losing their jobs and having benefits or hours reduced has jumped significantly compared to last year.
All in all, it can be said that broadly speaking, "consumer confidence" is higher in the first days of August than it was last month. Economic expectations are as high as they have been in the 20 months of Gallup's daily tracking. Americans are also slightly less likely to rate the economy as poor than they were in July. Still, the average consumer appears markedly reluctant to go so far as to say the economy is in excellent or good shape, and there has been no substantial increase in self-reported spending. All of this detailed analysis -- made possible by Gallup's daily tracking of a series of economic measures -- shows that the upward movement in consumer expectations appears to be a leading indicator waiting to some degree for the economic reality to follow.
Results for the month of August are based on telephone interviews with 6,102 national adults, aged 18 and older, conducted Aug. 1-12, 2009, as part of Gallup Poll Daily tracking. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±2 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.