Economic Confidence Drops To Lowest Since Shutdown As Dems Freak Out Over Imminent Recession
Authored by Megan Brenan of Gallup
- 49% in U.S. think a recession is at least fairly likely in the next year
- Economic Confidence Index +17 in September, down from +24 in August
- 50% say economy is fair or poor and 48% say it’s getting worse
Americans’ confidence in the economy has become less rosy this month as Gallup’s Economic Confidence Index fell to +17 from August’s +24 reading, marking the lowest level since the government shutdown ended in January.
At the same time, the public is evenly divided over the likelihood of a recession in the next year. The current expectation of a recession is nine points higher than it was in October 2007, just two months before the Great Recession began but slightly below a February 2001 reading, one month before that eight-month-long recession.
Economic Confidence Index Lowest Since January
The latest Economic Confidence Index results are from a Sept. 3-15 Gallup poll. As the poll was being conducted, the stock market was less tumultuous than earlier in the summer, but the August unemployment numbers showed that fewer new jobs were created than expected, concerns about the trade war with China continued and the global economy showed signs of slowing. As has been the case for months, economists continue to express concern about the possibility of a recession in the near future. The latest interest rate cut by the Federal Reserve was announced after the poll was completed.
Gallup’s Economic Confidence Index is the average of two components: Americans’ ratings of current economic conditions and their views of whether the economy is getting better or getting worse. The index has a theoretical maximum of +100, if all Americans believe the economy is excellent or good and getting better. The theoretical minimum is -100, achieved if all Americans say the economy is poor and getting worse.
Although Americans’ confidence in the economy has faltered this month, it remains far more positive than in the 2007-2009 recession years, when confidence bottomed out at -72 in October 2008. Still, the current +17 is well below the historic high of +56 in January 2000.
Looking at the individual components of the index, 48% of Americans currently think the economy is getting worse while 46% think it is getting better. Until this month, readings had been positive on balance since January for this measure and have been so for most of the Donald Trump administration.
Americans’ rating of the nation’s current economic conditions is the other factor comprising the Economic Confidence Index. The latest readings, though slightly less positive than the past few months, roughly match those of April and January. Currently, 15% of Americans rate economic conditions as “excellent,” 35% “good,” 36% “only fair” and 14% “poor.”
Public Is Divided About Recession Coming Within the Year
Recent surveys of economists and CEOs have found that most of them are predicting a recession in the U.S. by 2021. Economists point to the uncertainty about U.S. trade with China, the inverted yield curve and faltering global economies as signs that a recession is nearing. Yet, the public is divided over a possible recession in the near future. Half of Americans say it is “not too” (32%) or “not at all” likely (18%) and a roughly equal share say it is “very” (15%) or “fairly” (34%) likely.
Gallup has not asked this question on a regular basis but has done so when a recession seemed possible. The last reading, in October 2007, showed a more optimistic public than the current reading shows. At that time, 57% said a recession was not likely and 40% said it was. Two months later, the country was in the Great Recession of 2007-2009.
Gallup also asked Americans to predict whether a recession was in the offing in 2001 when the dot-com bubble was bursting, and at that time 53% said it was likely. The question was also asked in 1990 when the country was already in a recession and between 72% and 84% of Americans said a recession was already happening or likely to be coming soon.
Differing Views on the Economy by Political Party and Income Level
Republicans’ assessments of the economy and their forecast for the near future are far more positive than Democrats’ (and to a lesser extent independents’). Republicans are nearly three times as likely as Democrats to rate current economic conditions positively, more than four times as likely to say the economy is getting better, and more than three times less likely to think a recession is coming within the year
Like Democrats, Americans in households earning less than $40,000 hold much more negative views than those in higher income groups of current economic conditions, the outlook for the future and the likelihood of a recession.
While some economic indicators remain strong, many economists are sounding the alarm that a recession is coming in the near future. This latest polling finds that not all Americans are taking that warning to heart. Republicans hold starkly different views from Democrats which is not unusual in that those who identify with the party in the White House are typically more positive than others about the nation’s economy. Yet in 2008-2010, this was not the case as economic conditions were so bad that even partisans who identified with the president did not rate the economy positively. A recession could seriously cripple President Trump’s chances for re-election.