Gallup’s reading of Americans' confidence in the U.S. economy tumbled last month, reflecting the overall volatility in the stock market and race for the White House.
Gallup's Economic Confidence Index
averaged minus-14 for April, down from minus-10 in March. The April average ties with September 2015 as numerically the worst since confidence started climbing toward positive territory in late 2014 and early 2015 after gas prices began to decline.
“Although the U.S. labor market remains strong and U.S. stock values are high, there are still questions about how strong the economy is. The government's recently released gross domestic product estimates indicate the economy barely grew in the first quarter of 2016, with retail spending especially weak,” Gallup explained.
Economic confidence varied significantly throughout April, with Gallup's three-day rolling averages falling as low as -20 on two separate occasions and as high as -8. The most recent weekly average, based on April 25-May 1 interviewing, shows the confidence index at -15, right around the monthly average.
Gallup's Economic Confidence Index averages two components: how Americans view the economy currently and whether they see it improving or getting worse. The index has a theoretical maximum of +100, if all Americans were to rate the economy as "excellent" or "good" and "getting better"; and a theoretical minimum of -100, if all were to rate the economy as "poor" and "getting worse."
Recent economic data have given mixed signals about the direction and strength of the economy, Reuters
The ADP private sector employment report showed hiring in April fell to its lowest levels in three years. The report acts as a precursor to the more comprehensive government nonfarm payrolls data, which is expected on Friday.
According to a Reuters survey of economists, nonfarm payrolls likely rose by 202,000 jobs in April after rising 215,000 in March. The unemployment rate is forecast holding steady at 5 percent.
In contrast, another set of data showed the vast U.S. services sector expanded in April as new orders and employment accelerated, helping assuage some of those fears.
The U.S. Federal Reserve, which held monetary policy steady last week, is keeping a keen eye on data, while leaving the door open for a rate hike in June.
A strengthening labor market is expected to influence the pace of future rate hikes, although traders are pricing in only one hike later this year.
“Nothing is adding confidence to the health of the global economy,” said Kenny Polcari, director at brokerage O’Neil Securities. “There’s no real reason at the moment for the market to be making new highs,” Polcari told The Wall Street Journal.
To be sure, investor appear to very concerned amid the recent volatility.
“Our clients are very edgy, they’re nervous. The market drops like a rock into mid-February and then rallies from there, two very quick moves in a short time,” Scott Wren, senior global equity strategist at Wells Fargo Investment Institute, explained to WSJ.com.
(Newsmax wire services contributed to this report).
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