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Tags: Gallup | confidence | economy | index

Gallup: Economic Confidence Slides for Second Consecutive Month

Tuesday, 07 August 2012 03:17 PM EDT

Confidence in the U.S. economy slid for a second consecutive month in July, a Gallup poll finds.

Gallup's Economic Confidence Index averaged -26 in July, worse than -22 in June and not far away from the 2012 low of -27 measured in January.

The index is still higher than in July of 2011, when it sank to -42 amid the debt-ceiling debacle, in which political brinkmanship nearly threw the country into default.

Editor's Note: Unthinkable Haunts Investors: Evidence for Imminent 90% Stock Market Drop. 

Gallup's Economic Confidence Index assesses both current U.S. economic conditions as well as the country's economic outlook.

Fourteen percent of Americans said the economy is currently excellent or good, while 42 percent consider it poor, resulting in a -28 current conditions rating.

The forward-looking outlook rating showed that 36 percent of Americans feel the economy is getting better, with 59 percent feeling it is getting worse, which brought the outlook rating to -23, the worst in 2012.

The economy added a net 64,000 jobs in June, down from an initial reading of 80,000, which came in well below expectations.

The June jobs report was released in July, which could have dampened confidence.

Also in July, the government reported the economy grew 1.5 percent in the second quarter, according to advance government estimates, below the first quarter's 2 percent growth rate.

"U.S. economic confidence wavered during the month of July, likely because of several factors, including another tepid jobs report from the U.S. Bureau of Labor Statistics on July 6 and a mid-month report of lower-than-expected [gross domestic product] growth," Gallup found.

"This, combined with little positive news on the domestic front and Europe's continuing economic troubles, likely resulted in the July decline in confidence."

Meanwhile, uncertainty will shape confidence going forward, especially in an election year.

"Americans will need positive economic signs, such as the decline in unemployment seen earlier in the year, for the index to regain the positive momentum it had during the first part of the year. Politics may also be playing a role," Gallup reported.

"For the index to significantly improve, Republicans will need to have a more optimistic outlook on the economy. However, with the ongoing presidential campaign, there may be little immediate chance of narrowing the partisan gap."

The U.S. economy added 163,000 jobs in July, well above expectations, according to the latest jobs report from the Bureau of Labor Statistics.

However, households reported that 195,000 fewer people were working that month, suggesting the labor market continues to stagger along. Moreover, the unemployment rate increased to 8.3 percent in July from 8.2 percent in June.

"I'd call this a soft 163," said Steve Blitz, chief economist at investment research firm ITG in New York, according to CNBC.

"If you want to take from this the notion that the economy is not heading to a recession or something more ominous, that's fine. But if you want to take from this the idea that the economy is about to accelerate, I think that would be a big mistake."

Editor's Note:
Unthinkable Haunts Investors: Evidence for Imminent 90% Stock Market Drop.

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Tuesday, 07 August 2012 03:17 PM
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