Why we saw little week-on-week change in economic confidence
The Gallup Economic Confidence Index
The Gallup Economic Confidence Index (or ECI) is due for release on Tuesday, March 4. The ECI is based on telephone interviews with ~3,500 adults nationwide responding to two questions.
- The first question asks Americans to rate economic conditions in this country today.
- The second question is whether Americans think economic conditions in the country as a whole are getting better or getting worse.
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What did last week’s reading indicate?
The survey results revealed that more Americans believed that the economy is improving, although most Americans remain more negative than positive about current economic conditions. The ECI recorded a marginal increase to -15 for the week ending February 23, after registering -17 or lower the prior four weeks. The index is still negative and remains below the readings of -10 and higher recorded last year.
Americans named unemployment as the “most important problem” this month, with the economy continuing to rank as the second most pressing issue facing the nation. The economy and jobs clearly remain top concern for Americans when thinking about the nation’s challenges despite this small uptick in confidence.
What does the ECI mean for fixed income markets?
Based on the survey results, a decrease in the score means that more Americans in general believe economic fundamentals are deteriorating compared to fewer Americans who believe economic fundamentals have improved. Other factors remaining constant, this would imply that interest rates would remain low to spur growth. The reverse is true for an increase in the score.
To read about labor productivity in the U.S. economy, move on to Part 11 of this series.