Reporter Resources: The Economy

Gallup's Economic Confidence Index, which currently registers a score of -35, has been in negative territory since July 2021. The index did show improvement between November and March, gaining 20 points, but since then has slid back to where it was in December 2023. During President Joe Biden's term, confidence has slumped to as low as -58 in June 2022 amid soaring inflation, the worst reading since the Great Recession in 2008 and early 2009.

Gallup's Economic Confidence Index summarizes Americans' evaluations of current economic conditions (as excellent, good, only fair or poor) and their outlook for the economy (whether they believe it is getting better or worse).

The latest score is the result of Americans being more likely to describe the U.S. economy as “poor” (46%) than “excellent” or “good” (22%) and more likely to say the economy is “getting worse” (70%) than “getting better” (24%).

For an incumbent president to abandon his reelection campaign is rare in U.S. politics, and Gallup's Economic Confidence Index doesn't span back far enough to the last time this happened (1968) to offer any guidance. Under normal circumstances, the current index figure would not be a favorable one for an incumbent president.

Today's -35 index score is close to what it was in mid-1992 (-37), when incumbent president George H.W. Bush lost the election in a campaign dominated largely by economic concerns. When Donald Trump was defeated for a second term in 2020, evaluations of the economy were mostly neutral, at -4 (in October). Economic confidence ratings were neutral in October 2004 (+1) and October 2012 (-1), when incumbents won reelection, and were positive in October 1996 (+23) when Bill Clinton won a second term.

However, Gallup trends show it has the capacity to change in the span of a few months:

• In 2020, confidence plummeted from a 20-year high in February to a deeply negative -32 two months later, as the pandemic was starting, before climbing back to neutral territory (-4) by the time of the election.
• In 2012, the index score rose by a total of 13 points between March and October, likely aiding Barack Obama's reelection.
• In contrast, during the global financial crisis in 2008, the index experienced a decline of 21 points over the same period and remained low for months.

Thirty-three percent of Americans name an economic issue as the most important problem facing the U.S. — in line with the 29% to 38% range recorded since January 2023.

The latest figure includes the percentage naming the economy in general (13%), inflation or high cost of living (13%), and other economic issues such as unemployment (2%), the federal budget deficit (2%) and wage issues (2%).

Gallup asks Americans to rate their concern about a variety of national issues each March as part of its Environment poll. This year's survey, conducted March 1-20, asked respondents about 14 different issues, most of which have been tracked regularly since 2001.

The 55% of Americans who worry “a great deal” about inflation is just slightly above the percentages concerned about five other domestic issues that are troubling to majorities of Americans. These are crime and violence (53%), hunger and homelessness (52%), the economy (52%), the availability and affordability of healthcare (51%), and federal spending and the budget deficit (51%).

Another four issues are highly concerning to less than half but at least four in 10 Americans: illegal immigration (48%), drug use (45%), the Social Security system (43%) and the possibility of future terrorist attacks in the U.S. (43%).

In addition, fewer than four in 10 worry a great deal about the availability and affordability of energy (37%) and the quality of the environment (37%). Race relations (35%) and unemployment (33%) garner the least concern, with about a third highly worried about each.

For the third year in a row, the percentage of Americans naming inflation or the high cost of living as the most important financial problem facing their family has reached a new high. The 41% naming the issue this year is up slightly from 35% a year ago and 32% in 2022. Before 2022, the highest percentage mentioning inflation was 18% in 2008. Inflation has been named by less than 10% in most other readings since the question was first asked in 2005.

Gallup has asked Americans at least annually since 2005 to name, without prompting, the top financial problem facing their family. Inflation has topped the list for the past three years. The cost of owning or renting a home ranks second this year at 14%, a new high for that issue.

Other significant problems Americans identify include having too much debt (8%), healthcare costs (7%), lack of money or low wages (7%), and energy costs or gas prices (6%).

See the full list of issues in Gallup's latest update.

Inflation is named the most important financial problem by all key societal subgroups but garners higher mentions from certain age, income and political groups:

• 46% of older Americans (those aged 50 and older) mention inflation, in contrast with 36% of younger Americans (those under 50).
• Inflation is a more top-of-mind concern for middle-income (46%) and upper-income Americans (41% of those with an annual household income of $100,000 or more) than for lower-income Americans (31% of those with a household income of less than $40,000).
• 56% of Republicans, compared with 39% of independents and 26% of Democrats, name the issue as the most important financial problem facing their family.

Younger and lower-income Americans may be less likely to name inflation than their counterparts because other immediate financial concerns are more pressing for them. For example, 21% of adults under age 50 say housing or rental costs are their top concern, compared with 8% of those aged 50 and older.

Lower-income Americans are more inclined than upper-income and middle-income Americans to say personal debt, healthcare costs, lack of money and job loss are the top concerns facing their family.

A separate question in the April Economy and Finance survey asks Americans to say how much they worry about each of eight specific personal financial matters. Inflation is not one of those issues, but its influence is apparent in the heightened percentage who worry about not being able to maintain their standard of living. Fifty-five percent are very or moderately worried about maintaining their living standards, the third straight year a majority has done so after being below that level from 2017 through 2021.

Maintaining one's standard of living ranks as one of the three economic matters Americans worry most about, along with not having enough for retirement and being unable to pay medical bills in the event of a serious illness or accident. The latter two issues have consistently ranked first or second each year in Gallup polling dating back to 2001.

Less than half of U.S. adults worry about the five other financial matters, including normal medical costs, normal monthly bills, housing costs, paying for their children's college and making minimum payments on credit cards.

Fifty-four percent of Americans identify as part of the middle class, including 39% who say they are “middle class” and 15% “upper-middle class.” Another 31% consider themselves “working class” and 12% “lower class.” Just 2% of U.S. adults characterize themselves as “upper class.”

These readings are generally in line with those since the Great Recession. Before then, Americans were typically more likely to self-identify as members of the middle or upper-middle class and less likely to say they belonged to the working or lower class.

Historically, Americans' self-identified social class has been largely influenced by their income and education levels. U.S. adults with higher annual household incomes and those with college and postgraduate degrees are most likely to say they belong to the upper or upper-middle class. Americans with lower incomes and those with only a high school education are most likely to identify as working or lower class.

Older Americans, White adults and Democrats are also more likely than their counterparts to identify as members of the middle class.

Americans continue to rank real estate as the best investment for the long term among six options. Thirty-six percent choose real estate, followed by stocks or mutual funds (22%), gold (18%), and savings accounts or CDs (13%). Relatively few Americans believe bonds (4%) or cryptocurrency (3%) are the best long-term investments.

The percentage of adults choosing real estate is similar to a year ago, but more identify stocks and fewer name gold as the best investment this year. Stocks were last higher than now in 2021, when 26% chose them, while gold has returned to more typical levels after an increase last year.

Real estate has topped the list each year since 2014, with between 30% and 45% (in 2022) selecting it. In 2013, real estate essentially tied for first with gold and stocks; it trailed gold in 2011 and 2012.

Americans' historical tendency to choose real estate as the best long-term investment is consistent with their usual expectations of rising local home values.

Americans at all income levels perceive real estate as a better investment than other options. However, people from different income groups disagree on the value of other investments, most notably stocks and savings accounts.

Currently, 21% of Americans say it is a good time and 76% believe it is a bad time to buy a house. Those figures are essentially unchanged from last year — 21% and 78%, respectively — the worst in Gallup's trend.

Before last year, the prior low saying it was a good time to buy a house was 30% in 2022. All other measures had been 50% or higher, including a record 81% in 2003. Gallup has asked this question annually since 2005, and in 1978, 1991 and 2003.

The public's pessimism about the homebuying market likely reflects the combination of high home values, high mortgage rates and limited housing supply.

There are no meaningful differences in perceptions of the home market by region, urbanicity, homeownership, income, partisanship or age.

Meanwhile, 68% of U.S. adults expect home prices in their local area to increase in the coming year, up from 56% a year ago and among the highest readings Gallup has measured to date. The only higher readings were 71% in 2021 and 70% in 2005 and 2022.

Federal Reserve Chair Jerome Powell's latest economic confidence reading of 39% is statistically similar to last year's 36%. Alan Greenspan, who served five terms in the position, inspired majority-level confidence for each of Gallup's five readings between 2001 and 2005. In contrast, the two chairs of the Federal Reserve who followed Greenspan — Ben Bernanke and Janet Yellen — failed to register confidence ratings above 50%.

One reason Fed chairs typically engender less confidence than presidents is that the public is not overly familiar with them, and thus more likely to not offer an opinion on their leadership. This year, 16% do not offer an opinion on Powell. Historically, the average percentage not expressing a view on the Fed chair's leadership has been 17%.