PRINCETON, NJ -- Americans' economic optimism seems to have re-ignited amid a surge on Wall Street, aggressive Federal Reserve actions to inject money into the economy, a better-than-expected jobs report, and the completion of the midterm elections. Gallup's Economic Confidence Index averaged -22 over the first week of November -- an improvement from the monthly readings of -29 in October and -33 in September -- and tying the best monthly reading of 2010.
Americans' optimism about U.S. economic conditions as well as the outlook for the economy is better today than it was at this time a year ago. Whether this will in turn lead to some improvement in consumers' holiday spending intentions remains to be seen.
The Economic Confidence Index consists of two sets of U.S. consumer ratings: one involving consumers' perceptions of current economic conditions and the other involving their economic outlook.
Fewest in Two Years Rate the Economy "Poor"
During the first week of November, 40% of Americans rated current economic conditions "poor" -- down from 44% in October and 47% in September.
Consumers' ratings of current economic conditions, as reflected by their "poor" ratings, are considerably less negative now than they were during the first week of November 2009, when they averaged 49%.
Fewer Say the Economy Is "Getting Worse"
During the first week of November, 55% of consumers said economic conditions are "getting worse" -- an improvement compared with the 60% October average and the 62% of September. Right now, consumers' future expectations for the economy are better than the 59% of the same week in 2009.
Republicans Lead Increase in Optimism
Much of the increased optimism comes from Republicans -- whose Economic Confidence Index score increased 13 points from last month, compared with an improvement of 4 points each among independents and Democrats. While the surge on Wall Street and the improvement in the jobs picture may have improved economic confidence among all groups, the election results likely provided an extra boost to economic confidence among Republicans.
The shift among Republicans after the elections is consistent with previous Gallup research underscoring the political component evident in how Americans view the economy.
The Confidence Boost in Context
The improvement in Gallup's Economic Confidence Index during the first week of November implies that Friday's Reuters/University of Michigan Consumer Sentiment Index preliminary measurement is likely to show improvement from its October final, though the small sample size of the Consumer Sentiment Index survey makes estimating movements in this index somewhat challenging.
It appears that the Fed may already be seeing some of the benefits associated with its intention to pour more money into the U.S. economy. Wall Street surged as investors embraced the idea that the Fed's actions would increase asset values, including stocks. Gallup economic data show that companies increased their hiring in October as confirmed by the government's report that the private sector unexpectedly added 159,000 jobs last month. Now, Gallup's economic data show consumer confidence not only increasing in early November but exceeding the levels at this time a year ago.
Still, this new positive economic momentum is relatively modest. The U.S. unemployment rate remains at 9.6%, where it has been for the past three months, and the increase in jobs is not sufficient to bring it down. More than half of all Americans continue to think the economy is getting worse, not better. And, Gallup data suggest that the newly positive trend is just getting underway. The challenge going forward will be to build on this nascent positive economic momentum, extending its duration and its strength.
Gallup.com reports results from these indexes in daily, weekly, and monthly averages and in Gallup.com stories. Complete trend data are always available to view and export in the following charts:
Read more about Gallup's economic measures.
Results are based on telephone interviews conducted as part of Gallup Daily tracking during the first week of November ending Nov. 7, 2010, with a random sample of 3,461 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia, selected using random-digit-dial sampling.
For results based on the total weekly sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±3 percentage points. For results based on the total monthly sample of approximately 15,000 national adults, one can say with 95% confidence that the maximum margin of sampling error is ±1 percentage point.
Interviews are conducted with respondents on landline telephones and cellular phones, with interviews conducted in Spanish for respondents who are primarily Spanish-speaking. Each daily sample includes a minimum quota of 150 cell phone respondents and 850 landline respondents, with additional minimum quotas among landline respondents for gender within region. Landline respondents are chosen at random within each household on the basis of which member had the most recent birthday.
Samples are weighted by gender, age, race, Hispanic ethnicity, education, region, adults in the household, cell phone-only status, cell phone-mostly status, and phone lines. Demographic weighting targets are based on the March 2009 Current Population Survey figures for the aged 18 and older non-institutionalized population living in U.S. telephone households. All reported margins of sampling error include the computed design effects for weighting and sample design.
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.
For more details on Gallup's polling methodology, visit www.gallup.com.