Americans' outlook for the economy has become less positive as about half expect a recession in the next year, a new Gallup poll finds.
The recent Gallup Economic Confidence Index found 50% of Americans now rate economic conditions as fair or poor and 48% saying they are getting worse.
The index fell to +17 from August's +24 reading, marking the lowest level since the government shutdown ended in January, Gallup found.
Gallup's Economic Confidence Index is the average of two components: Americans' ratings of current economic conditions and their views of whether the economy is getting better or getting worse. The index has a theoretical maximum of +100, if all Americans believe the economy is excellent or good and getting better. The theoretical minimum is -100, achieved if all Americans say the economy is poor and getting worse.
Recent surveys of economists and CEOs have found that most of them are predicting a recession in the U.S. by 2021. Economists point to the uncertainty about U.S. trade with China, the inverted yield curve and faltering global economies as signs that a recession is nearing. Yet, the public is divided over a possible recession in the near future. Half of Americans say it is "not too" (32%) or "not at all" likely (18%) and a roughly equal share say it is "very" (15%) or "fairly" (34%) likely.
Although Americans' confidence in the economy has faltered this month, it remains far more positive than in the 2007-2009 recession years, when confidence bottomed out at -72 in October 2008. Still, the current +17 is well below the historic high of +56 in January 2000.
The Gallup poll was the second major indicator of a gloomy consumer economic outlook.
U.S. consumer confidence posted the biggest drop since the start of the year as Americans’ expectations for the economy and the job market deteriorated, posing a risk to the household spending that is underpinning growth, Bloomberg reported earlier Tuesday.
The Conference Board’s index decreased in September to a three-month low of 125.1 from a downwardly revised 134.2 a month earlier, according to data from the New York-based group. The median forecast in a Bloomberg survey of economists called for 133. Both the present situation and expectations gauges declined, with the latter dropping to the lowest level since January.
“The escalation in trade and tariff tensions in late August appears to have rattled consumers,” Lynn Franco, senior director of economic indicators at the Conference Board, said in a statement. “However, this pattern of uncertainty and volatility has persisted for much of the year and it appears confidence is plateauing. While confidence could continue hovering around current levels for months to come, at some point this continued uncertainty will begin to diminish consumers’ confidence in the expansion,” Franco said.
Experts were quick to put Tuesday's polls in context.
“It could be that all the bad news around trade tensions that occurred in early August perhaps hadn’t fully filtered into the responses for the Conference Board number until this month,” said Stephen Stanley, chief economist, Amherst Pierpont Securities LLC. Still, “I think the consumer is hanging in their and is likely to continue to do so.”
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