WASHINGTON, D.C. -- Gallup’s Economic Confidence Index registered -33 in June, essentially unchanged from May and consistent with the longer trend of negative public sentiment about the economy’s current and future states.
The index was less negative in the first quarter of 2024 than it had been in late 2023. But after reaching -20 in March, it has slipped back to December’s confidence level. Still, the current reading is not as negative as in October and November, when it was in the -40 range.
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 June 3-23 Gallup poll. Americans’ low confidence in the national economy is also evident in their continued mentions of the economy generally (named by 16%) and inflation (14%) as two of the most important problems facing the U.S.
Republicans (37%) and independents (39%) are about 10 percentage points more likely than Democrats (27%) to cite one or more economy-related topics -- such as jobs and the cost of living -- as the top problem. This pattern also encompasses inflation -- where Republicans (17%) and independents (15%) are roughly twice as likely as Democrats (8%) to say it is the No. 1 U.S. problem.
More Americans Rate Current Conditions as “Poor”
Twenty-five percent of Americans describe current U.S. economic conditions as “excellent” or “good,” up three points from May. However, the percentage rating conditions “poor,” now 48%, also increased slightly, blunting positive movement in the index.
The high proportion of Americans rating the economy as poor continues the dominance of this response in the trend since early 2022.
The net effect of these changes is that the index’s current conditions component (the percentage rating conditions as excellent or good minus the percentage rating them poor) remains stable at -23 from -24 in May and is the same as the December 2023 reading.
69% of Americans Predict Economy Will Get Worse
Americans have also been consistently more negative than positive since May 2021 in their assessments of the economy’s trajectory.
The June 2024 survey finds that about seven in 10 Americans (69%) believe the economy is “getting worse,” while 26% say it is “getting better." This is essentially unchanged from last month.
This results in a -43 net optimism score (% getting better minus % getting worse) for the economic outlook component of the index.
Economy and Election Implications
Americans’ confidence in the economy has historically been an important factor in their decisions at the ballot box. Bill Clinton easily won his reelection bid in 1996 with the ECI strongly positive (+23). But most incumbents on the ballot when ECI scores were near the neutral midpoint also prevailed. This was the case for George W. Bush and Barack Obama, with ECI scores of +1 and -1, respectively, in October of their reelection years. However, with ECI registering -4 in October 2020, Trump did not prevail.
Today’s -33 ECI score is closer to the -37 reading in September 1992, when incumbent President George H.W. Bush lost the election after a campaign dominated by economic concerns.
While the current ECI score is not promising for Biden’s reelection chances, Gallup trends show it has the capacity to change in the span of a few months. Besides global shocks to the economy, such as a pandemic in 2020 and the financial crisis in 2008, when confidence plummeted more than 20 points, in 2012, the index score rose by a total of 13 points between March and October, likely aiding Obama’s reelection.
Bottom Line
Economic confidence receded in April and May 2024 and held steady at that lower level this month. However, it is still markedly better than the deeply negative 2022 readings as low as -58, during a time when the inflation rate was at the highest levels seen since the 1980s. While interest rates have improved since late last year, inflation’s effect on prices continues. Gallup’s forthcoming monthly updates of Americans’ economic views will indicate whether the spring slump represents a temporary downturn or a significant reversal of confidence as this election year progresses.
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