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Economic Perspectives From U.S., Britain, Canada

Economic Perspectives From U.S., Britain, Canada

by Raksha Arora

Last week, the Federal Reserve deemed that the U.S. economy had regained enough traction to withstand another rate hike. Meanwhile, in Great Britain, the Bank of England took a more cautious view of the economy and left the benchmark rate unchanged. In Canada, policy-makers are veering toward another rate hike in anticipation of inflation pressures. So it seems that the economic news in these three countries has not been either particularly good or particularly bad of late.

At a time when the global economy faces the pressures of higher oil prices and a rising interest rate environment, data from recent Gallup Polls in the United States, Great Britain, and Canada* throw light on the public assessment of economic conditions in these countries.

Rating Current Economic Conditions: The U.S. Lags Behind

Throughout 2003, Canadians consistently gave better ratings to their economy than their counterparts in Great Britain and the United States gave to their own. But in 2004, the gap between Great Britain and Canada closed and the results of the most recent surveys indicate they are still close: Nearly half of both Canadians (48%) and Britons (47%) give "excellent" or "good" ratings to current economic conditions in their countries.

Opinions remain less sanguine in the United States, with just 39% of Americans describing economic conditions as excellent or good. Still, confidence in current economic conditions has improved in the United States, with positive ratings increasing from 29% in May 2004 to 39% in September. Comparable ratings in Great Britain and Canada remained stable over the same period.

In trying to explain the differing views of economic conditions in these three countries, there is little insight to be found in ratings of personal finances. Gallup asked residents of all three countries how often they worry that they will not have enough total income to meet their families' expenses and bills. There is not much variation among Britons, 30% of whom say they worry all the time or most of the time, Canadians (28%), and Americans (25%).

Furthermore, the unemployment rate in each country has been dropping fairly steadily over the last year. The Canadian labor market is still somewhat shakier than the labor markets in the United States and Britain. In August 2004, the unemployment rate was 7.2% in Canada, compared with 5.4% in the United States and 4.7% in the United Kingdom.

Looking to the Future: Americans Still Most Optimistic

Overall it seems that opinion in the United States is reaching a balance at which the view of current economic conditions is improving steadily and expectations for the future -- though not as unreservedly optimistic as they were at the heights of the 2003 bull market -- are still brighter than those of Canadians and Britons. At the time of the Aug. 9-11 survey in the United States, 45% of Americans said economic conditions in their country are getting better (47% said so in mid-September). Only 39% of Canadians and 33% of Britons say the same.

Bottom Line

Though Americans are still slightly more likely than Britons or Canadians to feel economic conditions are improving, they've lost ground in terms of optimism since the beginning of 2004. In February 2003, 60% of Americans believed that economic conditions were getting worse, but by the end of the year, stock markets had rallied and sentiment staged a dramatic recovery. By December 2003, 60% of Americans were betting that the economy was getting better.

But the surge in optimism was short-lived, and today the American opinion on future prospects is more divided. It remains to be seen whether the highly polarized political climate is spilling over into economic ratings in the United States, though it seems unlikely that the end of the election season will significantly alter Americans' feelings about their economic prospects. Can a world that is banking on the U.S. economy to pull it through tough times depend on a superpower that remains tentative about the future?

*Results in the United States are based on telephone interviews with 1,022 national adults, aged 18 and older, conducted Sept. 13-15, 2004; 1,005 national adults, aged 18 and older, conducted July 8-11, 2004; 2,250 national adults, aged 18 and older, conducted June 9-30, 2004; and 1,000 national adults, aged 18 and older, conducted May 2-4, 2004.  For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±3 percentage points.  The survey was conducted by Gallup USA.

 

Results in Canada are based on telephone interviews with 1,005 national adults, aged 18 and older, conducted Aug. 30-Sept. 6, 2004. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±3 percentage points. The survey was conducted by Gallup Canada.

 

Results in Great Britain are based on telephone interviews with 1,009 national adults, aged 18 and older, conducted Aug. 25-Sept. 7, 2004. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±5 percentage points. The survey was conducted by Gallup UK.

 

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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