U.S. Economic Confidence Holds at Nine-Year High

Justin McCarthy

Wednesday, December 14th, 2016

Americans' confidence in the economy remains higher than at any point since January 2008, with Gallup's U.S. Economic Confidence Index averaging +8 for the week ending Dec. 11. This score is unchanged from the prior week, which marked a record high in the nine-year trend.

The index's positive scores in recent weeks represent a reversal from the negative scores recorded in most weeks over the past nine years, except for a brief string of positive scores recorded in late 2014 and early 2015.

Donald Trump's election last month spurred significant improvements in Republicans' economic confidence, which pushed the index into positive territory. Now, both Democrats and Republicans have positive overall views of the U.S. economy, resulting in the record high for the index.

Gallup's U.S. Economic Confidence Index is the average of two components: how Americans rate current economic conditions and whether they feel the economy is improving or getting worse. The index has a theoretical maximum of +100 if all Americans were to say the economy is doing well and improving, and a theoretical minimum of -100 if all Americans were to say the economy is doing poorly and getting worse.

Twenty-nine percent of Americans rated the economy as "excellent" or "good" last week, while 22% said it was "poor," resulting in a current conditions score of +7. This is essentially unchanged from the previous week's score and is among the highest scores for this component in Gallup's trend.

Meanwhile, 51% of Americans said economic conditions in the country were "getting better," and 43% said they were "getting worse," resulting in an economic outlook score of +8 -- the same as the previous week's record-high score for this component.

Bottom Line

Rarely has Gallup found such a dramatic shift in Americans' economic confidence over the past nine years as it has in the past month. It coincides with several pieces of good economic news: the Dow Jones industrial average reaching new heights, the U.S. dollar continuing to strengthen and the unemployment rate (as reported by the Bureau of Labor Statistics) falling to its lowest point since August 2007.

But the positive shift in economic confidence is largely the result of Republicans' optimism after last month's presidential election. Until the president-elect takes office next month, it's a bit early to tell if the boost in confidence has lasting potential. Republicans could be experiencing a temporary high from Trump's victory. But on the other hand, their views of the economy could continue to improve once Trump settles into the White House, while Democrats' confidence could dwindle. Of course, much will depend on the actual course of the stock market, jobs reports and other economic indicators once Trump takes office.

From http://www.gallup.com/poll/199319/economic-confidence-holds-nine-year-high.aspx?utm_source=alert&utm_medium=email&utm_content=morelink&utm_campaign=syndication