Tags: Gallup | Economic | Confidence Falling

Gallup Poll: Economic Confidence Falling, Turning Volatile

Wednesday, 21 Mar 2012 11:41 AM

High gasoline prices are taking their toll on consumer confidence, which doesn't bode well for the economy, a Gallup poll finds.

Gallup's U.S. Economic Confidence Index dropped to -21 in the week ending March 18, down from a four-year high of -18 the week beforehand.

While the index is about the same as it was a month ago, such a swing in a short period of time suggests nerves are on edge about the country's future.

Editor's Note: Meltdown on Main Street Coming, Prepare Now

"Americans' economic confidence has been volatile in recent weeks. Widespread discussion of increasing gas prices by the press and politicians, as well as the financial hardship they cause many Americans, may have, at least in part, been responsible for the decline in confidence in the week ending March 18," Gallup reports.

"This may further depress consumers' attitudes — especially if gas prices remain high or continue to increase."

Yields have been rising in government bond markets, as investors are selling in search of more profitable investments like stocks.

Rising inflation rates can make fixed-income investments less attractive, and unless the Fed returns to buy bonds from banks to jolt the economy, a process known as quantitative easing, bonds may continue to fall.

Gasoline prices, meanwhile, have topped $4 a gallon in six states, which include Alaska, California, Connecticut, Hawaii, Illinois and New York, according to the Associated Press.

Fed Chairman Ben Bernanke says monetary policy authorities will continue to pay attention to possible inflationary fears playing out in bond markets.

"We're going to continue to analyze the financial data we get," Bernanke tells CNBC.

"It's an interesting period right now. We've seen some improvement, but we've still got a long way to go."

Despite headwinds facing the economy, monetary policy officials remain upbeat.

"The economy is still very challenging. Unemployment is still high, and that creates problems for everybody, obviously," Bernanke adds.

"I think the longer-term prospects of the country are very good and ultimately things will normalize, but in the short run of course we're still dealing with some important challenges."

Editor's Note: Meltdown on Main Street Coming, Prepare Now

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