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US Economic Confidence Plummets

US Economic Confidence PlummetsUS Economic Confidence Plummets

Though still historically high, Americans’ confidence in the economy fell to a six-month low in May, largely dragged down by Democrats’ worsening economic attitudes. Gallup’s US Economic Confidence Index averaged a score of +3 in May, down slightly from April (+5) but eight points below January’s record monthly high (+11).

Gallup’s US Economic Confidence Index is the average of two components: how Americans rate current economic conditions and whether they believe the economy is improving or getting worse. The index has a theoretical maximum of +100 if all Americans were to say the economy is doing well and improving, and a theoretical minimum of -100 if all were to say the economy is doing poorly and getting worse, Gallup.com reported.

Confidence in early June appears to be no different from that in May, with the latest weekly average also +3 for the week ending June 4.

Since the November presidential election, many Americans’ attitudes about the economy have dramatically improved. Both the weekly and monthly averages of Gallup’s US Economic Confidence Index now consistently produce positive figures rather than negative ones, as it largely did before the election.

The sharp uptick in economic confidence after the election was largely attributable to surging confidence among Republicans, but President Donald Trump’s business background or his economic proposals may have also convinced other Americans that the economy would prosper under his leadership. US financial markets have seemed to subscribe to this line of thinking, with several indexes reaching all-time highs in 2017.

Over the past few months, however, confidence has fallen as economic attitudes of self-identified Democrats have worsened—a trend that continued in May as Democrats’ monthly index score fell to -26. This represents a five-point dip from April’s average and the lowest monthly index score for Democrats since November 2011 (-29), when confidence was recovering from the tumble it took during the standoff between Congress and former president Barack Obama over raising the federal debt ceiling.

 

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