WASHINGTON, D.C. -- Americans' confidence in the economy in July was the lowest it has been in any month since April. Gallup's Economic Confidence Index slipped to -12 last month, down from -8 in June and -7 in May -- with the May reading representing the most positive monthly average since Gallup began tracking economic confidence daily in 2008. Still, consumers' confidence remains higher than the -16 reading in March -- the lowest monthly score this year -- which encompassed the public's reaction to the automatic budget cuts that took effect as part of sequestration.
From a longer-range perspective, the July score still represents one of the best monthly averages since 2008. Gallup's Economic Confidence Index measured -32 in January 2008 and plummeted to a low point of -60 in October 2008 as the recession worsened.
Confidence generally improved from its recessionary low and remained at a higher level from mid-2009 until mid-2011, when it fell sharply from -26 in May to -52 in August during an intense debate in Washington over raising the debt ceiling and the subsequent downgrading of the U.S. credit rating.
Confidence rebounded and generally moved higher in 2012 and 2013, despite setbacks during the fiscal cliff and federal budget sequestration debates. The monthly index score reached single digits for the first time in May and June 2013, though Americans were still more negative than positive about the U.S. economy.
The results for July are based on Gallup Daily tracking interviews, conducted by landline and cellphone, with more than 14,000 Americans. The Gallup Economic Confidence Index has a possible maximum of +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 -100 (reached if all rate the current economy as poor, and say the economy is getting worse).
Americans' Economic Outlook Sours More Than Their Views of Current Conditions
Gallup's Economic Confidence Index is based on two components: Americans' assessments of current economic conditions in the United States and their perceptions of whether the economy is getting better or worse. Most of the decline last month comes from a worsening economic outlook, although both index components dropped.
Americans' net economic outlook fell six points to -9 in July, from -3 in June. The current score is based on 43% saying the economy is getting better and 52% saying it is getting worse. The net economic outlook component nearly entered positive territory in May, reaching -1.
Americans' assessments of current economic conditions also declined last month, falling two points to -14 from -12 in June. The score reflects 20% rating current U.S. economic conditions as excellent or good and 34% saying they are poor.
Economic Confidence Slips Across Income Groups
Economic confidence declined across income groups in July, but middle- and lower-income Americans' confidence fell slightly more than upper-income Americans' confidence. Confidence among middle- and lower-income Americans fell five points to -14 in July, while that of upper-income Americans declined three points to +2.
Upper-income Americans' confidence remains more positive than negative on balance for the third consecutive month and is one of the highest scores for this group in five years. Middle- and lower- income Americans' confidence is still in negative territory and has returned to the lower levels Gallup measured earlier this year.
Democrats Still More Confident in the Economy Than Are Republicans and Independents
Democrats' confidence in the economy increased slightly in July, to +18, while Republicans' and independents' confidence declined. Democrats' confidence still exceeds the other partisan groups' confidence, and has remained in positive territory since February 2012.
Republicans' confidence fell to -36 last month from -32 in June, but is still much improved from -59 in November 2012 -- when President Barack Obama won re-election.
Young Adults' Economic Confidence Slips Back Into Negative Territory
Economic confidence among young adults aged 18 to 29 fell six points to -1 in July, from 5 in June -- with June being the highest monthly score for this group since Gallup began daily tracking in January 2008. Still, young adults in the U.S. generally remain more confident in the economy than they have been over the past 5 ½ years, even as Gallup finds that fewer young adults are holding full-time jobs in 2013.
Those who are older are less confident in the U.S. economy, as is typically the case. Nonetheless, Americans across age groups are generally more confident in the economy this year than they have been since January 2008.
Implications
Americans' confidence in the economy slipped in July, despite record-high U.S. stock prices and President Obama's refocusing his administration on job creation. This decline in consumers' confidence is most likely related to weak job growth, volatile gas prices, and worries about rising interest rates -- although there could be other causes.
The U.S. Bureau of Labor Statistics' July jobs report showed slower job growth last month compared with the first half of the year. Additionally, both the BLS and Gallup reported a decline in the U.S. unemployment rate that was mostly due to more people giving up their job search or seeking part-time work.
While higher U.S. stock prices seemed to boost Americans' confidence in the economy in the first half of the year, it may take significant and sustained improvements in the U.S. job market for Gallup's Economic Confidence Index to enter positive territory.
Gallup.com reports results from these indexes in daily, weekly, and monthly averages and in Gallup.com stories. Complete trend data are always available to view and export in the following charts:
Daily: Employment, Economic Confidence, Job Creation, Consumer Spending
Weekly: Employment, Economic Confidence, Job Creation, Consumer Spending
Read more about Gallup's economic measures.
View our economic release schedule.
Survey Methods
Results for this Gallup poll are based on telephone interviews conducted July 1-31, 2013, on the Gallup Daily tracking survey, with a random sample of 14,731 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia.
For results based on the total sample of national adults, one can say with 95% confidence that the margin of sampling error is ±1 percentage point.
Interviews are conducted with respondents on landline telephones and cellular phones, with interviews conducted in Spanish for respondents who are primarily Spanish-speaking. Each sample of national adults includes a minimum quota of 50% cellphone respondents and 50% landline respondents, with additional minimum quotas by region. Landline and cell telephone numbers are selected using random-digit-dial methods. Landline respondents are chosen at random within each household on the basis of which member had the most recent birthday.
Samples are weighted to correct for unequal selection probability, nonresponse, and double coverage of landline and cell users in the two sampling frames. They are also weighted to match the national demographics of gender, age, race, Hispanic ethnicity, education, region, population density, and phone status (cellphone only/landline only/both, and cellphone mostly). Demographic weighting targets are based on the March 2012 Current Population Survey figures for the aged 18 and older U.S. population. Phone status targets are based on the July-December 2011 National Health Interview Survey. Population density targets are based on the 2010 census. All reported margins of sampling error include the computed design effects for weighting.
In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
For more details on Gallup's polling methodology, visit www.gallup.com.
