Americans’ Confidence in the Economy Is Still Trapped in the Negatives

And it might shrink further as lawmakers scramble to avoid default.

Consumer confidence in the United States has recently dropped a few more points.
National Journal
Marina Koren
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Marina Koren
Aug. 27, 2013, 7:03 a.m.

At the be­gin­ning of the sum­mer, polls sug­ges­ted that Amer­ic­ans were al­most start­ing to feel bet­ter about the eco­nomy. But as back-to-school sea­son picks up, con­sumer con­fid­ence in the eco­nomy re­mains stuck in the neg­at­ives — and it’s head­ing fur­ther south.

Gal­lup’s Eco­nom­ic Con­fid­ence In­dex re­gistered minus 14 last week. In late May and early June, the in­dex re­gistered an all-time weekly high of minus 3, it but hasn’t gone above minus 10 since mid-Ju­ly.

Forty-two per­cent of Amer­ic­ans say the eco­nomy is im­prov­ing, while 54 per­cent say it’s get­ting worse. Twenty per­cent rated cur­rent eco­nom­ic con­di­tions “ex­cel­lent” or “good,” and 35 per­cent called them “poor.”

The Gal­lup Poll at­trib­utes the res­ults to dis­cour­aging em­ploy­ment news, rising mort­gage rates, and oth­er factors. While the un­em­ploy­ment rate fell to 7.4 per­cent in Ju­ly when the eco­nomy ad­ded 162,000 jobs, the num­bers were few­er than ex­pec­ted. At that rate of job growth, it would take about sev­en years to close the job gap cre­ated by the re­ces­sion, The New York Times re­por­ted. Also in Ju­ly, the rate at which new homes were sold fell 13.4 per­cent com­pared with June. Mort­gage rates, however, have been stead­ily rising since May.

As the U.S. ap­proaches the debt ceil­ing, mov­ing ever closer to­ward de­fault, more dips in con­fid­ence should be ex­pec­ted in the fall. Amer­ic­ans’ out­look on the eco­nomy has shown a tend­ency to co­in­cide with such polit­ic­al events. Con­fid­ence plummeted in the sum­mer of 2011 when Con­gress agreed to a deal at the last minute to raise the debt ceil­ing, which led to a down­grade of the coun­try’s cred­it rat­ing. Gal­lup also re­gistered de­creases at the end of last year dur­ing the fisc­al-cliff de­bate and in early March when se­quest­ra­tion went in­to ef­fect.

In a let­ter to House Speak­er John Boehner on Monday, Treas­ury Sec­ret­ary Jac­ob Lew pro­jec­ted that the de­part­ment’s “ex­traordin­ary meas­ures” cur­rently be­ing un­der­taken to avoid de­fault will be “ex­hausted in the middle of Oc­to­ber.” If his­tory has a way of re­peat­ing it­self, the pre­dic­tion does not bode well for Amer­ic­ans’ feel­ings about the re­cov­er­ing eco­nomy.

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