Gas prices go up, and confidence in the economy goes down.
That is the finding of the latest Gallup Economic Confidence Index for the week ending March 18. American’s economic confidence worsened to 21, Gallup announced Tuesday, a decrease from the prior week’s -18, a four-year high.
The surge during the previous week occurred during the weekend after the government reported that the U.S. economy added a better-than-expected 227,000 jobs in February and that the unemployment rate remained unchanged at 8.3 percent.
Why the downturn last week? One cause, Gallup surmised, was that Americans were paying more for gasoline on a daily basis. In many cities, gas has topped $4 for a gallon of regular. Some analysts forecast gas reaching $5 a gallon in the summer months.
Gallup’s Economic Confidence Index is comprised of two components: Americans’ ratings of current economic conditions and their perceptions of whether the economy is improving or getting worse. The percentage of Americans who believe the economy is “getting better” fell last week to 41 percent from 43 percent the preceding week. The percentage who view the economy is “getting worse” increased two percentage points to 55 percent. Forty-two percent think that the economy is “poor,” an increase of three percentage points from the prior week.
Gas prices, now about 30 cents more than the same period last year, according to the AAA Daily Fuel Gauge Report, will have a destabilizing effect on U.S. economic confidence in the weeks ahead, Gallop forecasts. “Despite some modestly positive economic news, Americans may sense that continued economic growth will be difficult if gas prices continue to increase,” Gallups’s report concluded.
Another survey released Tuesday by Rasmussen Reports echoed the shaky economic confidence as determined in the Gallup Poll. The Rasmussen Consumer Index, a daily measure of consumer economic confidence, dropped two points. While up eight points from three months ago, it has dropped one point in a week and three points in the last month. Almost half of respondents (46 percent) said their personal finances are getting worse.
A February survey of affluent households conducted by Millionaire Corner find the majority in moderate mode when it comes to investments. Fifty-seven percent said they are willing to place a limited portion of their investments at risk. While 61 percent said that they are not likely to change their investment risk, 29 percent said they would invest more conservatively.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.