US: Gallup US ECI

Tue Nov 07 07:30:00 CST 2017

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Americans' confidence in the U.S. economy was positive in October, with the Economic Confidence Index (ECI) at plus 3 for the month after recording a plus 4 in September. Though the index's current reading is on the low end of what has been measured for 2017 so far, it remains well above the mostly negative ratings recorded from 2008 to 2016. Confidence was higher earlier in the year as President Donald Trump's inauguration renewed economic hopes among Republicans.

Weekly index ratings in October showed the varying degrees of confidence Americans had in the national economy over the course of the month. In early October, Americans' confidence dipped into negative territory, for the first and only time so far in 2017, before recovering in subsequent weeks.

The ECI 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 plus 100 if all Americans were to say the economy is doing well and improving, and a theoretical minimum of -100 if all were to say the economy is doing poorly and getting worse.

Last month, 34 percent of Americans described the economy as "excellent" or "good," while 22 percent described it as "poor." This resulted in a current conditions component of plus 12 for October -- consistent with the plus 11 to plus 14 range this component has remained within since July.

Meanwhile, a majority of Americans said the economy was "getting worse" (51 percent), compared with a smaller 44 percent who said it is "getting better." As a result, the economic outlook component equaled -7 in October, one of the lower readings in the past year.

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 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.