Consumer Optimism in Short Supply, Unchanged From June

GALLUP NEWS SERVICE

PRINCETON, NJ -- Consumer spirits lifted slightly over the past month, but remain generally subdued, as they have for most of the past six and a half years.

Gallup determines Americans' overall economic mood by combining respondents' rating of current economic conditions with their perception of whether the economy is getting better or getting worse. On this basis, 25% of Americans are now categorized as "positive" about the economy, 49% as "negative," and 22% as "mixed." In June, 20% were positive and 60% were negative. This compares with 34% positive and 38% negative in January.

Current attitudes about the economy, from Gallup's July 12-15, 2007 survey, are now very close to the average level since 2001 when the downturn first took hold. More negative attitudes than were seen from about 2001-2003 and more positive attitudes were recorded in 2004, as well as at a few points within the past year.

To put these figures in context, at the height of a boom period of the economy and consumer spirits in January 2000, 61% of Americans were positive about the economy and 15% were negative.

Details

The slight improvement in Americans' economic outlook over the past month is seen in both of Gallup's core measures of the economy. The percentage rating current economic conditions as excellent or good has increased from 34% in June to 40% currently, and the percentage perceiving economic conditions to be getting better has increased from 23% to 29%. Both measures are now similar to where they were in March and April.

Looking at the long-term trends on these measures using quarterly averages, the graph below shows that 40% of Americans now consider current economic conditions "excellent" or "good." This is just slightly higher than the average of 35% for the past six and a half years, since January 2001.

On the same basis, the 29% of Americans now saying the economy is getting better is a bit below the average of 37%.

Jobs Outlook

There has been no change since last month in an additional measure that asks Americans to rate national employment conditions. An identical 43% in July as in June say now is a good time to find a quality job, while 50% consider it a bad time. This measure has been fairly stable all year.

Using quarterly averages, the following graph summarizes the 2001-present trends for all three measures. This illustrates how public perceptions of the job market have been steadily improving over the past four years, since about the beginning of 2003. The percentage of Americans rating current economic conditions as excellent or good has generally followed an upward path as well, while perceptions about the direction of the economy (as "getting better") has been volatile, and not highly correlated with the other two ratings.

Top of Mind Concern

A fourth indicator of consumer attitudes included in Gallup's monthly economic polling comes from the open-ended question "What is the most important problem facing the nation today?" Gallup calculates the net percentage of Americans naming any economic problem, ranging from unemployment to inflation to gas prices, to the economy in general. This month, only 16% of Americans name any economic issue as most important. This is much lower than the average of 32% seen since 2001, and ties with December 2006 for the single lowest reading over the entire period.

Pairing the long-term trend of net economic mentions with Gallup's core economic ratings, it seems that Americans' top of mind concern about the economy and their negative outlook for the economy (the percentage saying it is "getting worse") are out of step. Since about the beginning of 2004, economic pessimism has increased while top of mind concern about the economy has declined. Ratings of current economic conditions as "only fair" or "poor" have been flat relative to the other two measures.

A much greater correlation is seen when the trends for net mentions of the economy as the most important problem with negative perceptions of the job market. The two follow highly similar paths.

Bottom Line

Americans appear to be in a profound economic rut. Perceptions of the economy have been worse over the years, but they have also been a lot better. Minor improvements in consumer outlook since 2001, as with the latest July figures, have repeatedly reversed themselves within a few short months. One bright spot has been consumer attitudes about the jobs market, which has steadily brightened after bottoming out in 2003.

An additional positive dimension is the relatively low level of Americans who think of the economy when asked to name the nation's top problem. (The Iraq war ranks No. 1 with 35%.) The reason for that could be perceptions of the job market. While still mixed, those perceptions are much improved over earlier this decade.

Survey Methods

Results are based on telephone interviews with 1,001 national adults, aged 18 and older, conducted July 12-15, 2007. 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. 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.

6. How would you rate economic conditions in this country today -- as excellent, good, only fair, or poor?

7. Right now, do you think that economic conditions in the country as a whole are getting better or getting worse?

ECONOMIC OUTLOOK GROUPS (COMBINED RESPONSES: Q.6-7)

D15. Which of the following best describes your current situation -- employed full-time, employed part-time, retired, a homemaker, a student, unemployed but looking for work, or unemployed and not looking for work?

8. Thinking about the job situation in America today, would you say that it is now a good time or a bad time to find a quality job?

9. (Thinking now about your personal financial situation) What is the most important financial problem facing your family today? [OPEN-ENDED]