US: Gallup US ECI

Tue Feb 03 07:30:00 CST 2015

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Gallup's U.S. Economic Confidence Index, which has been positive for each of the past six weeks, finished January with an average score of plus 3-the first time a monthly average has been in positive territory since the recession. The monthly index score is up eight points from December-the highest month-to-month increase in more than a year.

Gallup's Economic Confidence Index is the average of two components, Americans' ratings of current economic conditions and their views on whether the economy is getting better or getting worse. The index has a theoretical maximum of plus 100, if all Americans thought the economy was excellent or good and getting better; and a theoretical minimum of minus 100, if all Americans thought the economy was poor and getting worse.

The latest weekly average, for the week ending February 1, is also plus 3, falling roughly in the middle of the index's minus 100 to plus 100 range.

For the entire month of January, 27 percent of Americans said the economy is "excellent" or "good," while 26 percent said it is "poor." This results in a current conditions score of plus 1, up six points from December. Meanwhile, the economic outlook score increased by nine points, reaching plus 5, based on 50 percent of Americans saying the economy is "getting better" while 45 percent said it is "getting worse."

With a score of plus 1, middle- and lower-income Americans registered a positive reading for the first time in seven years; that score climbed eight points from December.

Upper-income Americans, whose annual household incomes are $90,000 or more a year, reached their highest level of confidence yet, at plus 15. This is the fourth consecutive positive monthly reading that higher-earning Americans have registered.

Overall, Gallup's numbers confirm improved data on confidence from the University of Michigan, the Conference Board, and Bloomberg. The consumer sector clearly currently is leading the economy.

Gallup's Economic Confidence Index is a composite of two questions that Gallup asks daily of a nationally representative sample of 500 adults, aged 18 and older, and reports weekly based on approximately 3,500 interviews. One question asks Americans to evaluate current economic conditions; the other measures their perceptions of whether the economy is getting better or getting worse. The two questions have equal weight in the index, and are reported without revisions or seasonal adjustments. They can also be analyzed separately, providing insight into changes in the overall index. The survey is conducted with respondents contacted on landlines and cellphones

In today's fast-moving, information-loaded environment, consumer attitudes can, and often do, change multiple times between the beginning and the middle or end of a month, and the Gallup index keeps up with these fluctuations. Followers of the metric therefore develop a keen understanding of the degree to which various economic and political events -- including monthly BLS jobs reports, major changes in the stock market, and significant congressional budget actions -- affect consumer attitudes.

Investors are highly sensitive to consumers' mindset as a potential leading indicator of consumer spending behavior. The Gallup index provides a timely reading of consumer attitudes, facilitating precise evaluations of consumers' mood and the drivers of consumer attitudes. The index gives investors a valuable tool to help predict what the other indexes will report each month, which in turn can help investors anticipate any major stock market reactions.

Econoday reports monthly data. Gallup reports results of the ECI on on a daily, weekly, monthly and quarterly basis.

The Gallup Economic Confidence Index has a possible maximum of plus 100 (reached if all Americans rate current economic conditions as excellent or good, and all Americans say the economy is getting better) and a possible minimum of minus 100 (reached if all rate the current economy as poor, and say the economy is getting worse). The zero midpoint indicates either neutral or mixed attitudes about the economy. Gallup has asked the component questions periodically since 1992, monthly since October 2000, and daily since January 2008. Since 1992, the index has ranged from a high of plus 56 in January 2000, coincident with a period of robust U.S. economic performance and a balanced federal budget, to a low of minus 65 in October 2008, during the global financial crisis.