U.S. Economic Confidence Best in a Year
Economy

U.S. Economic Confidence Best in a Year

by Dennis Jacobe, Chief Economist

Current index score is highest since same week a year ago

PRINCETON, NJ -- U.S. economic confidence is at -20 for the week ending Feb. 12, improved from -25 the prior week and the best since the -18 reading in mid-February 2011.

Gallup Economic Confidence Index -- Weekly Averages Since February 2011

The Gallup Economic Confidence Index is an average of two components: Americans' ratings of current economic conditions and their outlook for the economy. Economic confidence has been improving steadily over the past five months and is now at its highest point in a year.

Americans have grown steadily more positive about current economic conditions since last August, when the budget battles, stock market declines, and fears of a double-dip recession sent economic confidence to a low for the year.

The pronounced increase in economic confidence so far in 2012 is largely driven by a sharp increase in consumers' feelings about the U.S. economy's future direction. The percentage of Americans saying the economy is "getting better" increased to 42% last week, while the percentage saying it is "getting worse" fell to 54%. Both of these measures are at their best levels since the 43% "getting better" and 52% "getting worse" of the week ending Feb. 13, 2011. In a separate question, consumers' "poor" ratings of the economy, now at 41%, are at their lowest level in a year.

Gallup Economic Confidence Sub-Indexes -- Weekly Averages Since August 2011

Americans' economic confidence, though still in negative territory, is now near its highest levels of the past four years. Since Gallup started tracking economic confidence daily in 2008, the highest weekly average was the -18 at this time a year ago. At various times over the past four years, consumers have become more positive about the immediate future of the U.S. economy, only to become more pessimistic on each occasion.

Gallup Economic Confidence Index -- Weekly Averages Since January 2008

Bottom Line

U.S. economic confidence continues to improve, consistent with January's modest improvement in unemployment and job creation. Wall Street as well as Main Street seems to feel that the overall economy is improving, if slowly. Even investors' fears about the European financial crisis seem to be moderating to some degree. As a result, economic confidence seems poised to potentially break its four-year ceiling to reach its highest level in the weeks ahead.

Still, the U.S. Federal Reserve continues to talk about a moderate recovery -- so moderate that it plans to keep interest rates low for several years. More significantly, gas prices are at their highest level ever for this time of year, and are continuing to increase. Soaring gas prices have tempered consumer optimism on many occasions in the past. Additionally, Gallup finds unemployment ticking higher in recent days, making it possible the U.S. government will not report another decrease in the unemployment rate for February.

Usually, consumer perceptions of the economy tend to improve and drive increased consumer spending and overall economic recovery. In turn, increased consumer spending drives improvement in hiring and jobs -- as well as in the lagging indicator of unemployment. This time around, it appears improving job market conditions are making consumers feel better about the economy. This unusual situation implies that unemployment and jobs could be turning into leading indicators of the current economic recovery. Whether this will continue to be the case, and job market conditions can continue to drive consumer perceptions of economic recovery, remains to be seen.

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:

Daily: Employment, Economic Confidence and Job Creation, Consumer Spending
Weekly: Employment, Economic Confidence, Job Creation, Consumer Spending

Read more about Gallup's economic measures.

View our economic release schedule.

Survey Methods

Results are based on telephone interviews conducted weekly as part of Gallup Daily tracking with a random sample of more than 2,000 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 sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±3 percentage points.

Results for the week ending Feb. 12, 2012 are based on 3,639 telephone interviews conducted as part of Gallup Daily tracking with 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 this weekly sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±3 percentage points.

Interviews are conducted with respondents on landline telephones and cellular phones, with interviews conducted in Spanish for respondents who are primarily Spanish-speaking. Each sample includes a minimum quota of 400 cell phone respondents and 600 landline respondents per 1,000 national adults, with additional minimum quotas among landline respondents by region. Landline telephone numbers are chosen at random among listed telephone numbers. Cell phone numbers are selected using random-digit-dial methods. 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, and phone status (cell phone only/landline only/both, cell phone mostly, and having an unlisted landline number). Demographic weighting targets are based on the March 2011 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.

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