Economic Confidence in March Highest Since January 2008
Economy

Economic Confidence in March Highest Since January 2008

by Dennis Jacobe, Chief Economist

Index has increased for seven straight months

PRINCETON, NJ -- The Gallup Economic Confidence Index reached -20 in March, up from -22 in February and its highest level since Gallup Daily tracking began in January 2008. The index has increased for seven straight months after falling to -52 during the federal debt crisis last August.

Gallup Economic Confidence Index -- Monthly Averages

The Gallup Economic Confidence Index is an average of two components of consumers' psychology: Americans' ratings of current economic conditions and their perceptions of whether the economy is getting better or getting worse.

Increasing optimism about the future direction of the economy has been mainly responsible for the surge in Americans' overall economic confidence since last summer. The economic outlook component of the index has improved by 47 points to -12 from -59 in August 2011. By contrast, perceptions of current economic conditions have improved by a much more modest 18 points to -28 from -46.

Generally speaking, it is not unusual for economic confidence to be driven initially by the economic outlook component of the index, with current conditions catching up over time.

Gallup Economic Confidence Sub-Indexes -- Monthly Averages Since January 2011

Upper-Income Americans Most Positive but Their Optimism Is Not Increasing

The Economic Confidence Index among upper-income Americans -- those making $90,000 or more annually -- is -10, higher than that among other income groups, despite leveling off in March. The relative optimism among this group is typical, with rare exceptions such as during the worst points of the financial crisis in 2008-2009 and during the peak of the federal debt ceiling debate last August. However, the gap in confidence between the upper-income and the lower-income fell to 16 points in March from 19 points the previous month.

Confidence among upper-middle-income Americans -- those making $60,000-$90,000 -- increased slightly in March, while that among middle- and lower-income Americans was essentially unchanged.

Gallup Economic Confidence Index -- Monthly Averages, by Annual Household Income

Democratic Confidence in Positive Territory

Economic confidence among Democrats remained positive in March at +9, compared with +8 the prior month. Republicans' and independents' confidence was essentially unchanged and remained in negative territory, at -44 and -25, respectively. While these last two political groups have significantly lower confidence levels and, as usual, the president's party shows more confidence than they do, confidence has been increasing across all parties since late last year.

Gallup Economic Confidence Index -- by Party ID

Weekly Economic Confidence Also at -20

Weekly confidence fell back to -20 during the week ending April 1 -- the same as the average for all of March. During the previous week, ending March 25, economic confidence hit a new weekly high of -17, marking the first time weekly economic confidence exceeded -18 in more than four years.

Gallup Economic Confidence Index -- Weekly Averages

Implications

Americans' confidence in the U.S. economy is improving, with economic confidence having now increased for seven consecutive months. Increasing optimism about the unemployment picture is likely a strong driver of improving consumer expectations. Monday's positive report about U.S. manufacturing could also help bolster confidence, as could Federal Reserve Board Chairman Ben Bernanke's apparent support for continuing the Fed's stimulative policies.

On the other hand, gas prices continue to go up. A key question is whether the U.S. economy can continue its modest economic recovery as gas prices approach the key psychological level of $4 a gallon and the July 2008 record price of $4.11. Further, as Bernanke noted last week, questions remain about the sustainability of declining unemployment without stronger overall economic growth.

In this regard, Friday's U.S. government unemployment report takes on added significance. Positive unemployment numbers may increase economic confidence and allow it to reach a new, higher level. Negative job numbers could do just the opposite.

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, 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 as part of Gallup Daily tracking March 1-31, 2012, with a random sample of 15,240 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia.

For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±1 percentage point.

Results for the week ending April 1, 2012, are based on interviews with a random sample of 3,419 national adults, aged 18 and older.

For results based on this sample, 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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