U.S. Economic Confidence Edges Downward

Fewer say economy is getting better

by Alyssa Brown

WASHINGTON, D.C. -- Americans' confidence in the economy has declined slightly for two consecutive weeks after reaching its highest level in more than five years. Gallup's Economic Confidence Index is now -9, the lowest it has been in over a month.

The index has registered improvements in most weeks since it fell to -22 in early March -- when automatic federal spending cuts as part of sequestration took effect. It reached a five-year weekly high of -3 during the week ending June 2, after there was positive news about U.S. stock prices and the housing market in May.

The slip in Americans' confidence over the past two weeks comes as U.S. stock prices have been more volatile amid concerns that the Federal Reserve may scale back its economic stimulus efforts, such as its bond-buying program. Additionally, gas prices have increased in many parts of the country and the U.S. Bureau of Labor Statistics released a tepid jobs report for May.

Gallup's Economic Confidence Index has two components: Americans' assessments of current economic conditions and their perceptions of the nation's economic outlook -- that is, whether the economy is getting better or worse. Although both components worsened over the past two weeks, Americans' economic outlook took a larger tumble.

Americans' net rating of the nation's economic outlook fell to -4 last week from -1 the prior week, after peaking at +4 three weeks ago. The current score, which represents 45% of Americans saying the economy is getting better and 49% saying it is getting worse, is the worst recorded since the week ending May 12.

Americans' net rating of current economic conditions held steady at -13 from the prior week, but is down from -9 three weeks ago. Last week's score is based on 20% of Americans saying the economy is excellent or good, and 33% saying it is poor.

Bottom Line

Americans' confidence in the economy declined slightly over each of the past two weeks, and is now the lowest it has been in over a month. It is not clear whether this drop in confidence during the first two full weeks of June is a temporary departure from Americans' higher levels of consumer confidence measured in May, or the beginning of a downward trend. While the dip in Americans' confidence may have been a reaction to struggling U.S. stock market prices or other short-term factors, it could also more broadly reflect Americans' views on the slow economic recovery.

U.S. Economic Confidence Edges Downward