Americans’ confidence in the U.S. economy reached its lowest level so far in 2016, averaging -16 for the week ending April 24, Gallup’s U.S. Economic Confidence Index reported on Thursday.
The last time Gallup recorded such a poor public perception of the economy was last August, amid crashing stock markets around the world and fears that China’s slowing growth might slip into a full-fledged depression. It was obvious why people were feeling anxious in August 2015, but the reasons for this recent plummet are less clear. The stock market has been strengthened in recent weeks, hiring numbers are brisk, and home prices are rising.
Yet Americans in general are quite pessimistic about the future of the U.S. economy. Sixty percent of those polled say the economy is getting worse, as the Gallup report notes.
“Pessimism has increased despite a strong stock market in recent weeks and a persistent low unemployment rate. However, there have been reports of weak retail sales and expectations of low first quarter economic growth. Gas prices have also started to rise, although they remain well below where they were for most of the past decade. Finally, consistent statements from presidential candidates about how they would fix the U.S. economy if elected might play a part in keeping Americans’ economic optimism at lower levels.”
It seems the biggest concern among the American public is that the future looks bleak for the United States. which isn’t helped by recent news that the economy nearly ground to a halt at the beginning of this year, only growing 0.5 percent in the first three months of the year, as CNN Money reports.
This shockingly low figure is well below the average 2 percent kept up in recent years. Growth of U.S. GDP, or gross domestic product, didn’t even meet the low estimates of economists, who forecast 0.7 percent. In February, the Atlanta Federal Reserve was even optimistic enough to project 2.5 percent. However, stats on retail sales and consumer spending has been revised down significantly since then.
While CNN mentioned a variety of factors, such as “tepid consumer spending, global headwinds, a struggling manufacturing sector and weak business investment,” for bringing down economic growth, another factor may be the U.S. presidential race, and the negative rhetoric by candidates concerning the economy. Polled voters of both major political parties list the economy as their number one concern, and leading candidates Donald Trump, Hillary Clinton, and Bernie Sanders all speak negatively about the state of the economy in different ways.
However, the correlation between the dip in public confidence and the election doesn’t quite line up, since Gallup did not observe a pronounced dip until the middle of March. CNN posits another hypothesis, calling it an “economic reality check.”
“Here’s an economic reality check: Incomes for the lower middle class and middle class still aren’t showing much sign of a pickup. In 2014 and, especially, 2015, people were told not too worry: more people were getting jobs and the economy was gaining momentum. Raises would soon follow. But that isn’t happening at a healthy pace. As a result, Americans appear to be more cautious on how they spend their dollars.”
The U.S. also regularly goes through a winter slump in growth before experiencing an increase in spring and summer. How the public feels about the economy of a country matters a lot for stocks, markets, consumer spending, and countless other factors, and it seems Americans are feeling far less confident about their pocketbooks. The rate of savings increased from 5 percent at the end of 2015 to 5.2 percent during the first quarter of 2016.
Confidence in the U.S. economy isn’t as low as it was in the beginning of the recession. Still, the downward trends in economic growth and confidence are concerning.
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