WASHINGTON, D.C. -- Americans’ outlook for the U.S. economy has improved this month, while their view of current economic conditions remains unchanged. The net effect on Gallup’s Economic Confidence Index (ECI), which summarizes those two attitudes, is slightly positive, pushing the index score up eight points in August to -27. Although still negative, it’s the highest reading for the index since March.
The latest results are from an Aug. 1-20 Gallup poll, spanning a time when Americans were presented with contradictory economic signals. At the start of the month, there were reported worries that the economy could be facing a recession given the increase in the U.S. unemployment rate. However, these worries were put to rest by reports of continued strong retail sales and reduced inflation.
Economic Outlook Recovering From Inflation
Americans have been consistently more negative than positive about the economy’s trajectory for over three years, since the start of high inflation in 2021. But this month, the percentage of Americans saying the economy is “getting better” has improved seven percentage points to 31% -- one of only three times since 2021 that optimism about the economy has exceeded 30%, the others being earlier this year. Meanwhile, 63% say the economy is “getting worse.”
Few Still Rate Current Economic Conditions Positively
Although more Americans this month perceive the economy to be getting better, their assessment of current economic conditions hasn’t changed.
Forty-five percent of Americans in August describe current economic conditions as “poor” and 31% as “only fair,” while about a quarter say current conditions are “excellent” or “good” (24%). These ratings are nearly identical to those recorded in July and closely match every monthly reading this year, except for March, which was slightly less negative.
Improved Outlook Pushes Economic Confidence Higher
Mainly as a result of Americans’ improved economic outlook (from a net -46 in July to -32 in August), Gallup’s Economic Confidence Index has increased from -35 to -27 in the past month. The August reading is the first improvement in the index since March. From November until March, confidence improved at least slightly each month, before sliding backward in April.
Gallup’s ECI 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.
Democrats’ Better Economic Outlook Drives Increased Confidence
While economic confidence is negative nationally, and deeply negative among Republicans (including independents who lean Republican), it has been modestly positive among Democrats and Democratic leaners during most of Joe Biden’s presidency. It has become slightly more positive among Democrats in the past month, increasing from +16 to +21, after Vice President Kamala Harris replaced Biden as their party’s standard-bearer in the 2024 election.
Democrats’ improved economic confidence reflects increased optimism about the economy’s direction among both Democrats and independents who lean Democratic, with more now saying it is getting better. Republicans and independents who lean Republican show little movement on this measure.
Economy, Inflation Rise on U.S. ‘Most Important Problem’ List
While economic confidence is stronger this month, the percentage of Americans mentioning economic issues when asked to identify the top problem facing the country has edged higher.
Most of the economic concerns focus on the economy in general (at 18% in August vs. 13% in July) and inflation (at 15%, up from 13%), with smaller percentages of Americans naming unemployment, lack of money, the gap between the rich and poor, the federal budget deficit or other economic matters. In all, 41% of Americans name one or more specific economic concerns, well exceeding the 33% doing so in July and the highest rate all year.
Mentions of the economy in general now essentially tie immigration (19%) as the top specific issue Americans name as the nation’s top problem. Fewer Americans in August mention the government as the leading problem, falling 10 points to 16%.
Quality Job Outlook Declining
Gallup periodically asks Americans for their assessment of the job market, which is not part of the Economic Confidence Index. Currently, 45% of Americans say it is a good time to find a quality job, while 50% say it is a bad time.
This month’s “good time” percentage is down four points from the prior measure in April and continues a downward trend from the 64% measured in January 2023. The new reading, mostly taken after the government announced an increase in the unemployment rate in early August, is the lowest Gallup has measured since April 2021, when 43% rated the job market positively.
Bottom Line
Gallup's Economic Confidence Index has grown a bit less negative in August, driven by a boost of optimism from Democrats about the economy’s direction, but significant consumer concerns persist.
Americans still consider inflation a top U.S. problem, which may be more of a comment on higher prices resulting from three years of elevated inflation than on the current inflation rate, which is the lowest it has been since March 2021. Additionally, confidence in the job market is waning, with fewer Americans believing it’s a good time to find a quality job.
It remains to be seen if recent signals of economic strength in retail sales, weekly jobless claims, lower gas prices and near-record stock values offset these other consumer concerns in the final months of the election season or if the cumulative effects of inflation continue to dampen Americans' perceptions of the economy.
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