Economic Pessimism Growing In U.S.

By Jeffrey Jones of Gallup

Gallup’s Economic Confidence Index measured -45 in May, down from -39 in each of the previous two months. It is the lowest reading in Gallup’s trend during the coronavirus pandemic, and likely the lowest confidence has been since the tail end of the Great Recession in early 2009.

Gallup’s Economic Confidence Index is a summary measure of Americans’ perceptions of current economic conditions and their outlook for the economy. It has a theoretical range of +100 (if all respondents say the economy is excellent or good and that it is getting better) to -100 (if all say it is poor and getting worse).

The latest results are based on a May 2-22 Gallup poll, conducted at a time of record-high gas prices, elevated inflation, government reports of declining economic growth in the first quarter, and a slumping stock market. Low unemployment is a rare bright spot, but employers are still struggling to find workers to fill needed jobs, which is contributing to ongoing supply chain problems.

Gallup has measured Americans’ perceptions of the economy on its multiday telephone surveys since 1992, but did so infrequently between 2009 and 2017. It is possible that confidence was lower at some point during those years than it is now.

Confidence was clearly lower than now in February 2009, when the index registered -64 in that month’s Gallup survey.

Americans Less Positive About Current Conditions

Currently, 14% of U.S. adults rate economic conditions as either “excellent” or “good,” while 46% say they are “poor,” with another 39% rating them as “only fair.” The Confidence Index takes into account the net of excellent and good versus poor responses, which is -32 this month. In April, 20% of Americans rated the economy positively and 42% said it was poor, a net of -22.

Meanwhile, 20% of Americans say the economy is getting better and 77% say it is getting worse, essentially the same as in April and March.

Inflation Continues to Rank Among Top U.S. Problems

Although not nearly as common as during the 2007 to 2009 recession, economic concerns figure prominently when Americans are asked to name, without prompting, the most important problem facing the U.S. Eighteen percent mention inflation specifically and 12% mention the economy in general terms. Inflation essentially ties the government as the top overall problem, with 19% naming the government.

Other frequently cited problems include immigration, race relations or racism, abortion, unifying the country, and crime and violence.

Mentions of inflation have leveled off since March, with readings of 17% or 18%, after increasing throughout the fall and winter months. They remain relatively high compared with recent history but have been higher in the past, including 52% in October 1981, 49% in January 1982 and 31% in April 1982, around the time inflation was last at its current rate. Inflation had been named by an average of 1% of Americans between 1990 and 2021.

More generally, responses to the most important problem are similar to April. The main exception to that is abortion, which increased from 1% to 5% after a draft opinion of a Supreme Court decision that would overturn Roe v. Wade was leaked. Most of those mentioning abortion are Democrats or lean Democratic, indicating that the response mainly reflects pro-choice Americans’ concerns about overturning the decision, rather than Republicans’ concerns about abortion per se.

The 5% mentioning abortion is small in absolute terms but is the largest Gallup has measured for the issue since it began tracking mentions of it in 1984. Ten percent of Democrats and Democratic leaners name abortion, putting it on par with mentions of inflation (13%) and race relations (10%) among this group, but still behind the government (17%) as the top problem.

Bottom Line

Americans’ economic pessimism took a turn for the worse this month, and it is likely the lowest it has been since the end of the Great Recession. Last year, as inflation began to increase, most other economic factors remained healthy, including economic growth, stock values and unemployment. But economic growth contracted in the first quarter, and if the second quarter shows a similar decline in economic output, the U.S. will meet the usual definition of a recession used by economists. Such a designation could erode U.S. economic confidence even further.