Americans remained pessimistic about the economy last year. Confidence has improved recently, reaching its highest levels since last spring, but has fallen from -28 in 2010 to -37 in 2011, according to the Gallup Economic Confidence Index. And while all of the individual states remain negative on the economy, some are less pessimistic than others. 24/7 Wall St. reviewed the economies of the states with the most and the least confidence in the economy. North Dakota is the most confident state; West Virginia the least.
The Gallup Economic Confidence Index measures Americans’ assessments of current conditions and their views of whether the economy is improving. 24/7 Wall St.’s analysis of the index revealed several interesting relationships between a state’s confidence level and its own economic conditions. The states with healthier local economies are more optimistic than those that still struggle with the effects of the recession.
Many of the states that have a relatively high degree of confidence in the economy have felt this way for several years now, ranking high on the list previously. North Dakota, for example, which is the most optimistic state, was also the most optimistic in 2008.
All of the states that are more optimistic relative to other states have healthy job markets. In December, all of the states with the most confidence had unemployment rates lower than 7%, significantly below the national average of 8.5% at the time. While some of the states with the least confidence had good unemployment figures, five of them had unemployment rates above the national average, and four had among the 10-worst unemployment levels.
The housing market condition of a state also appears to play a meaningful role in its economic confidence. Home values in states that are most worried about the economy dropped from the third quarter of 2010 to the third quarter of 2011, according to Fiserv Case-Shiller. The states with the five worst-performing housing markets were among the most pessimistic ones. The reverse is also true. Home values only improved in seven states during the period. And four of those seven states are among the most optimistic about the economy.
The most economically confident states also have among the lowest poverty rates in the country, measurably below the 15.3% national average. In fact, most states that believe the economy is doing well have poverty rates of less than 12%.
Wealth and affordable living are also related to economic confidence. The states that are most pessimistic about the economy are generally poorer and have among the highest costs of living relative to median income. Maine — one of the most pessimistic states — has the 19th-lowest median income and the 12th-highest cost of living. The states that are least pessimistic are wealthy and have relatively low costs of living. Utah, one of the least pessimistic, has the 13th-highest median income in the country and the sixth-lowest cost of living.
24/7 Wall St. reviewed the states that were most and least optimistic about the economy based on Gallup’s Economic Confidence Index, which can go as low as -100 and as high as +100. Negative scores indicate there are more negative responses about the economy than positive ones. As many as 48% of Americans think the economy’s current condition is poor, and only 11% think it is excellent or good. Only 29% think the economy is improving, while over 66% think it is getting worse. Because there were more negative responses about current conditions and about the economy’s prospects, all of the states have negative scores.
These are the states that believe in the recovery and those that do not.