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Small Business Digest


Survey Predicts a Better Economic Index in 2013

The Gallup U.S. Economic Confidence Index rose to -18 in the week of January 7-13, a slight improvement over the -21 reading the week prior. While confidence remains lower than it was in the weeks before and after the presidential elections, it is higher than through all of 2011 and the rest of 2012, continuing an uptrend established since the -54 low in September 2011.

The Gallup Economic Confidence Index is based on surveys of Americans concerning their feelings about the current economic situation and their perception of whether or not the economy is improving. Gallup began tracking economic confidence in 2008 and the Index has yet to reach positive territory. The -10 reading the week before the 2012 presidential election is the highest it has ever been.

“The current -18 reading is very close to a high point for the economic index. Considering the improvements being made in small business lending, real estate, production, and employment we feel that 2013 will be the year the index finally reaches positive territory,” said Terry Robinson, president of the Lending Circle (a division of Sunovis Financial.) “Confidence is the one thing that has been lacking throughout the recovery and this has been affecting the strength of the recovery quite negatively. Once confidence returns we should see many different positive ramifications for the U.S. economy.”

Though the index is rising, Americans are still more negative than positive regarding the current economy and the future direction of the economy. The current condition score of -23 is based on a mere 16 percent describing current conditions as excellent, while 39 percent said current conditions are poor. The future outlook fared better at -12, with 41 percent saying the economy is improving and 53 percent saying it is becoming worse.

This trend of Americans believing the future economy will be better than the current economy has been in place since December 2011. Before that the situation was reversed, with more Americans believing current conditions were positive versus the future of the U.S. economy. The negativity surrounding the current economic conditions began during the 2011 debt ceiling debates in late July, which was soon followed by the downgrade in the U.S. credit rating and a drop in the stock market. Unemployment at that time was also in excess of 9 percent.

Confidence remained low due to the fiscal cliff issue and though that has been partially resolved, Congress still needs to deal with spending cuts and another raising of the debt ceiling. Assuming no other crisis arises, once these two issues are resolved we should expect confidence to move strongly higher.

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