Gallup's U.S. economic confidence index was minus 9 for the week ending May 3 -- its lowest weekly score since December. This reflects a six-point decline from the previous week, and is the largest week-to-week drop since last July. After falling from the high points in January and February this year, the index had barely moved in the previous six weeks. It had wavered between minus 3 and minus 4 since late March, before dropping last week. This included an average of minus 3 for all of April. And nearly all weekly readings in 2015 prior to now had been close to zero, with little week-to-week change. Even after last week's sharp decline, the index's latest figure is well above most readings Gallup recorded from 2008 to 2014.
The recent dip in Americans' economic confidence -- which is being dragged down largely by the lower economic outlook component -- is likely the culmination of a variety of economic factors. Though stocks rebounded by last Friday, the previous week had been fraught with market losses in the Dow and S&P. Meanwhile, the prices Americans were paying for gas increased in the latter half of April, with the U.S. Energy Information Administration reporting an increase of 17 cents per gallon over two weeks. Gallup has found that Americans' confidence in the economy is related to how much they pay for gasoline. Additionally, the recent report that the nation's GDP grew a lackluster 0.2 percent in the first quarter -- a disappointing figure compared with previous quarterly growth -- may have dampened consumers' economic hopes.
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 Gallup.com 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.