U.S. Economic Confidence Dips for a Second Month in a Row

WASHINGTON, D.C. -- Gallup’s Economic Confidence Index registered -34 in May, reflecting further deterioration in how Americans assess the economy’s current state as well as its trajectory.

The index had improved significantly from -40 in November to -20 in March, before falling to -29 in April.

Gallup’s Economic Confidence Index summarizes Americans’ evaluations of current economic conditions (as excellent, good, only fair or poor) and their outlook for the economy (whether they believe it is getting better or worse).

The index has a theoretical range of +100 (if all Americans rate current conditions as excellent or good and say the economy is getting better) to -100 (if all Americans rate the economy as poor and say it is getting worse). In Gallup’s trend of these measures since 1992, the highest ECI score was +56 in January 2000, and the lowest was -72 in October 2008.

The latest results were collected in a May 1-23 Gallup poll, which shows that confidence in the economy did not improve despite somewhat positive economic news. The Dow Jones Industrial Average climbed substantially during most of this period, though it lost some of these gains in the final week of surveying. At the start of the month, the U.S. Labor Department reported an increase in U.S. jobs, but at a lower rate than in most months over the past year.

Assessments of Current Economic Conditions Most Negative Since November

Twenty-two percent of Americans describe current U.S. economic conditions as “excellent” or “good,” down slightly from the prior month, marking the lowest figure recorded since December’s 22%.

Since early 2022, Americans have consistently been most likely to describe the economy’s current conditions as “poor.” The latest measure finds 46% of Americans viewing the economy this way, only slightly higher than the April reading but the highest since November.

The net effect of these changes is that the index’s current conditions component dipped to -24 from -20 in April and is the lowest score for this component since November (-31).

Economic Outlook Also Reverts to Levels Recorded in the Fall

Americans have been consistently more negative than positive in their assessments of the economy’s trajectory since May 2021.

The May 2024 survey finds that seven in 10 Americans (70%) say the economy is “getting worse,” while 26% say it is “getting better."

This results in a -44 net optimism score for the economic outlook component of the index, down from -38 in April and the lowest since November (-49).

Economy, Inflation Still Rank Near Top of U.S. Most Important Problem List

Americans’ flagging confidence in the national economy is also evident in their continued mentions of the economy and inflation as two of the most important problems facing the U.S. Immigration and the government also rank at the top of the list.

Immigration surpassed the other three in February, March and April, but mentions of this issue have fallen nine percentage points since last month.

In May, the government (21%), immigration (18%) and the economy in general (17%) are statistically tied as the most important problem in the nation, while 12% of U.S. adults cite inflation.

Mentions of immigration are down significantly from April and prior months, when they essentially tied a July 2019 reading as the highest in Gallup’s trend. Illegal border crossings between the U.S. and Mexico have continued at elevated levels this year.

Partisans continue to offer differing perspectives on the most pressing U.S. problem, with 43% of Republicans and just 5% of Democrats mentioning immigration. Independents have become much less likely to name this issue since April, with mentions dropping 14 points to the current 11% for this group.

Republicans (22%) are twice as likely as Democrats (11%) to name the economy, while Democrats (27%) are more likely than Republicans (15%) to mention the government. U.S. adults in both party groups are about equally likely to cite inflation -- 14% of Republicans and 10% of Democrats do.

Bottom Line

Economic confidence has receded in the past two months. However, it is still markedly better than most measures collected in 2022 and 2023. Gallup’s monthly updates will better indicate whether this is a momentary downturn or a significant reversal of confidence as this election year progresses. Though confidence in the economy is not always a decisive factor in election outcomes, the current index figure is similar to where it was when George H. W. Bush was defeated in 1992.

The economy and inflation remain top issues in the minds of Americans, when they are asked to name the greatest problem facing the nation, but fewer now mention inflation than did so between early 2022 and early 2023, a period when economic confidence was also lower than it is now. The government, which has had a consistent presence at the top of the list over the past decade and a half, and immigration vie with economic issues as the top problems, according to Americans. Mentions of immigration remain high, but have, at least temporarily, come down from the peaks Gallup recorded earlier this year -- perhaps in response to the decrease in migrants coming across the border in May.

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