Gallup's U.S. Economic Confidence Index improved to -27 in week ending Jan. 8, continuing steady improvement from when index fell below -50 this past summer; Americans' economic confidence now most positive Gallup has measured since May 2011

Michelle Rivera

PRINCETON, New Jersey , January 10, 2012 (press release) – The Gallup Economic Confidence Index improved to -27 in the week ending Jan. 8, continuing the steady improvement in the index seen since the summer, when it fell below -50. Americans' economic confidence is now the most positive Gallup has measured since May 2011, and is approaching the -20 level recorded a year ago.

The Economic Confidence Index rose seven points in the past week, up from -34 in the week ending Jan. 1. The index is now up significantly from -39 at the start of December, and from -43 at the start of November.

Americans' perceptions about the economy's direction have improved significantly over this period, rising from -45 two months ago to -21 today -- a 24-point improvement. More specifically, 37% during the week ending Jan. 8 say the economy is getting better and 58% say it is getting worse, producing the -21 outlook rating. By contrast, views about current economic conditions are up eight points, from -41 to -33. Eleven percent of Americans now rate economic conditions "excellent" or "good," while 44% call them "poor."

As a result of these changes, the outlook component of the index is now significantly more positive than the current conditions component, a switch from as recently as early December.

Bottom Line

Gallup's weekly Economic Confidence Index ratings are up significantly from their summer lows, improving by an average of two points each week since early October. If the index continues on that trajectory, economic confidence would cross into positive territory by mid-April, in plenty of time to benefit President Barack Obama's re-election bid.

That scenario likely depends on continued improvement in the nation's unemployment rate. The decline in the government's U.S. unemployment rate -- from 9.2% in late August to 8.5% in December as measured by Gallup -- helped lift Americans' economic mood at the end of 2011, and any setbacks in that area could be equally effective at stifling it. Also, rising gas prices, political conflict in Washington over payroll taxes and the debt ceiling, and continued softness in housing all represent potential drags on consumer optimism. However, at least for now, unemployment and Americans' economic attitudes are both improving, and that has the potential to vastly change the political environment later this year.

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