Despite low unemployment, low gasoline prices and strong markers like car sales, a malaise continues dog impressions about the health of the U.S. economy. Some of this is based in slow gross domestic product (GDP) improvement. Whatever the exact reasons, the new Gallup U.S. Economic Confidence Index has slipped to the point where 59% of Americans say the economy is “getting worse.”
The percentage of Americans who say the economy is getting better has dropped to 37%. The figures are the most pessimistic since August.
According to Gallup researchers:
Americans’ views of the national economy have been somewhat turbulent over the last several weeks, with confidence improving one week only to fall the following week. From a broad perspective, economic confidence so far this year has neither moved into a sustained period of positivity nor entered into a steady decline. Americans are confronted with presidential candidates using the economy as one of their talking points, mixed signals from national economic reports, volatility in the stock market and an apparent end of sub-$2 gas prices nationally — all of which may be affecting their economic assessments.
Americans’ cautiousness in their assessments of the economy may not be far off from those of economic leaders, however. Federal Reserve Board Chair Janet Yellen has been slow to raise interest rates, with some economists arguing Yellen has been overly cautious and has underestimated the economy’s actual strength. Yellen’s critics say the slow pace of raising rates will put the Fed at a disadvantage, with the possibility of increased inflation as the economy reaches its employment targets.
If this pessimism slips into consumer confidence, the economic recovery could slow again. Consumer spending is about two-thirds of GDP. Some economists put the number near three-quarters. The situation cannot be helped by corporate earnings that are the worst in several years. These are the results, to some extent, of U.S. business and personal economic activity.
The recovery, if consumer pessimism is any indication, will slow.