After stagnating for much of the summer, Americans' confidence in the economy has been rising throughout August, including a three-point increase last week, Gallup's Economic Confidence Index shows.
Confidence is now the strongest it has been since early March and, more generally, is at one of its highest points in the past nine years.
Overall satisfaction with the state of the economy, meanwhile, may be one reason that Americans' perceptions of several major business and industry sectors have risen to 14-year highs.
Gallup's U.S. Economic Confidence Index averaged +11, up three points from the previous week. The index has increased by nine points over the past three weeks and is now at its highest level since mid-March.
Gallup's U.S. Economic Confidence Index is the average of two components: how Americans rate current economic conditions and whether they believe the economy is improving or getting worse. The index has a theoretical maximum of +100 if all Americans were to say the economy is doing well and improving, and a theoretical minimum of -100 if all were to say the economy is doing poorly and getting worse.
Americans' economic perceptions have been mostly positive throughout 2017. This is a fundamental change from 2008 through most of 2016, when pessimism prevailed.
Current-Conditions Component Registers 9-Year High
Amid the bundle of good economic news, Americans' perceptions about the current state of the economy reached a post-recession high last week. For the week ending Aug. 20, 37% of Americans described economic conditions as "excellent" or "good," while 19% rated conditions as "poor." As a result, the current conditions component stood at +18, up slightly from +16 the week before.
Americans' economic expectations turned positive last week for the first time since April, with the outlook component rising four points to +3. This reflects 48% of Americans saying the economy is "getting better" and 45% saying it is "getting worse."
However, the latest Gallup poll was taken before President Donald Trump's Tuesday night comments on trade and a government shutdown, which provoked another round of investor caution and drove stocks lower Wednesday on Wall Street.
Investors have grown increasingly concerned about the Trump's ability to legislate his pro-growth agenda given the near constant political rumblings in the White House. Trump’s latest comments once again raised concerns about the administration’s ability to deliver on its fiscal plans and heightened unease about the future of global trade.
The S&P 500 Index fell after gaining the most in a week on Tuesday following Trump’s rally in Phoenix where he threatened to end the North American Free Trade Agreement and shut down the government over funding for a wall on the Mexican border, Bloomberg reported.
“The increased prospects of a tax reform bill seemed to get most of the credit for the rally”...“at least some of that has gone out the window,” Matt Maley, an equity strategist at Miller Tabak & Co., wrote in a note to clients on Wednesday.
Contributing to the slump are reports that “the relationship between the President and Senate Majority Leader McConnell has broken down badly.”
Lawmakers face a late-September deadline to raise the debt ceiling or risk a default, and Trump's comments on Tuesday evening came hours after a lawmaker said there was "zero chance" of the ceiling not being raised, Reuters explained.
Fitch Ratings said on Wednesday a failure by U.S. officials to raise the ceiling in a timely manner would prompt it to review its rating on U.S. sovereign debt, "with potentially negative implications."
"Trump saying he would be willing to shut down the government over the wall obviously doesn't really inspire much confidence in anyone," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
"The debt limit, which is truly urgent and something that needs to be addressed, where theoretically failure should not be an option, that is something of a litmus test for the market."
(Newsmax wires services contributed to this report).
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