Gallup's U.S. Economic Confidence Index averaged plus 11, the highest monthly average in Gallup's nine-year trend. However, the index has been slightly lower so far in February. The index peaked at plus 19 for the Jan. 21 to 23 three-day average after President Donald Trump's inauguration and shortly before the Dow Jones hit a new high. However, the index's high point did not last. The three-day averages have since dipped to smaller single-digit scores, including a plus 8 average for Feb. 3 to Feb. 5.
January's plus 11 score marks the third consecutive month the index has been in positive territory. This is a new feat for an index that has had mostly negative monthly measures since its inception, except for January and February 2015.
In January, 31 percent of Americans rated the economy as "excellent" or "good," while 21 percent said it was "poor," resulting in a current conditions score of plus 10 -- marking the highest monthly reading for this component since 2008. The economic outlook component also reached a new high score of plus 11 in January. This score was the result of 52 percent of Americans saying economic conditions in the country were "getting better," while 41 percent said they were "getting worse."
Gallup's Economic Confidence Index is a composite of two questions that Gallup asks daily of a nationally representative sample of 500 adults and reports weekly based on approximately 3,500 interviews. The first asks Americans to evaluate current economic conditions and the other measures their perceptions of whether the economy is getting better or getting worse. The two questions have equal weight in the index. The survey is conducted with respondents contacted on landlines and cellphones.
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.