A new Gallup poll found that Americans' outlook for the economy has soured in the past two months, with 48% now saying economic conditions are worsening -- up from 45% in December and 36% in November.
Meanwhile, Americans remain positive about the availability of quality jobs and are still split on whether the economy is in overall good shape, the poll found.
Americans were split last month on whether the economy is in good shape (50% saying "excellent" or "good") or not (49% saying "only fair" or "poor") and little has changed this month. Forty-nine percent now have a positive view (12% "excellent and 37% "good") and 50% a neutral (36% "only fair") or negative one (14% "poor").
Prior to December, Americans had grown more optimistic during 2018 that the economy was getting better. The percentage believing the economy was improving, which stood at 46% in December 2017, rose to 57% by November 2018. However, a 10 percentage-point tumble to 47% in December was followed by a three-point drop this month to 44%. The corresponding level of pessimism over the past year saw the percentage thinking the economy is getting worse fall as low as 34% in October before rising to the current level of 48%.
The public has been dealing with several troubling economic factors this month, including the current federal government shutdown that began Dec. 20, volatility in the stock market that produced major declines in December and a government report released Jan. 4 that showed an uptick in national unemployment. All three events had occurred or were occurring while the poll was being conducted Jan. 2 through Jan. 10.
While it is impossible to know what effect the federal shutdown has had on perceptions of the economy, it is a fact that a 16-day shutdown in October 2013 coincided with drops in public confidence in the economy. The decline in confidence disappeared within a few months, however.
With that in mind, it may turn out that the future of the unemployment rate and the stock market will have far more bearing than the shutdown on whether Americans' views on their nation's economy turn sour over the rest of 2019.
The Gallup report is just another in a long, recent string of pessimistic predictions on the economy.
For its part, the International Monetary Fund cut its forecast for the world economy, predicting it will grow at the weakest pace in three years in 2019 and warning fresh trade tensions would spell further trouble.
In its second downgrade in three months, the lender blamed softening demand across Europe and recent palpitations in financial markets. It predicts global growth of 3.5 percent this year, beneath the 3.7 percent expected in October and the rate in 2018, Bloomberg reported.
“The world economy is growing more slowly than expected, and risks are rising,” Managing Director Christine Lagarde told reporters in Davos, Switzerland.
The outlook is perhaps more upbeat than that of many investors who openly fear a U.S-led slowdown taking hold. The fund left its projections for the U.S. and China unchanged and even anticipates a pickup in worldwide expansion to 3.6 percent next year.
Risks nevertheless “tilt to the downside,” the IMF said in a report which came hours after China revealed the slowest expansion since 2009 last quarter. The IMF’s outlook will set the tone for this week’s World Economic Forum meeting in Davos.
“It is important to take stock of the many rising risks,” said Gita Gopinath, the fund’s new chief economist. “Given this backdrop, policymakers need to act now to reverse headwinds to growth and prepare for the next downturn.”
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