U.S. Economic Confidence Plummets as 63% Believe Economy Is Getting Worse
The Gallup Economic Confidence Index, reflecting American sentiment on current economic conditions, fell to -27 in August. Despite remaining negative, this is the index’s highest reading since March.
Over Two-Thirds Say Economic Outlook Is Declining
For over three years, Americans have consistently been more pessimistic than optimistic about the economy, dating back to the start of high inflation in 2021. However, this month saw a seven-point increase in the percentage of Americans who believe the economy is ‘getting better,’ rising to 31%. This is one of only three instances since 2021 where optimism has surpassed 30%, alongside earlier this year.
Despite this, 63% still believe the economy is ‘getting worse.’ Gallup’s Economic Confidence Index offers a measure of American sentiment toward current economic conditions—ranging from excellent to poor—and their expectations for its trajectory, improving or worsening.
Economy and Inflation Climb on U.S. 'Most Important Problem' List
Economic confidence may be stronger this month, but more Americans are highlighting economic issues as the top problem facing the country.
Concerns primarily center on the overall economy, which rose to 18% in August from 13% in July, and inflation, which increased to 15% from 13%.
Smaller percentages of Americans are focused on issues like unemployment, financial insecurity, income inequality, the federal budget deficit, or other economic factors. Overall, 41% of Americans now cite one or more economic concerns, a significant increase from 33% in July and the highest rate this year. The general economy is now nearly tied with immigration (19%) as the most frequently mentioned specific issue. In contrast, mentions of government as the top problem have decreased significantly, dropping 10 points to 16% in August.
Inflation Has Been a Top Concern
For the third consecutive year, the proportion of Americans identifying inflation or high living costs as their family's top financial problem has hit a new peak. This year, 41% cite the issue, a slight increase from 35% last year.
The latest findings come from Gallup’s annual Economy and Personal Finance poll, conducted between April 1 and 22, 2024. Since 2005, Gallup has asked Americans annually to name the top financial problem facing their family without prompting.
Inflation has been the leading concern for the past three years.
Surging Transportation and Food Costs Crushing Americans
Between 2019 and 2023, the all-food Consumer Price Index (CPI) surged by 25 percent, surpassing the growth rate of the all-items CPI, which stood at 19.2 percent during the same period.
While food prices saw a rise lower than the 27.1 percent increase in transportation costs, they outpaced the upticks in housing, medical care, and all other primary categories.
Demographic Breakdown of Inflation Concerns
Inflation is the top financial concern across all major societal groups, though certain age, income, and political segments express higher levels of concern.
Among older Americans (50+), 46% cite inflation as their primary worry, compared to 36% of younger Americans (under 50).
Middle-income earners (46%) and upper-income earners (41% of those making $100,000 or more annually) are more concerned about inflation than lower-income individuals (31% of those with incomes under $40,000).
The issue is most pressing for Republicans, with 56% naming it their top financial problem, followed by 39% of independents and 26% of Democrats.
Concerns About Maintaining Standard of Living
Retirement and medical emergencies are additional sources of concern. A separate survey question asks Americans to rate their level of worry about eight specific personal financial issues, not including inflation.
However, inflation's impact is seen in the increased percentage of those anxious about maintaining their standard of living.
Fifty-five percent express significant or moderate worry about sustaining their lifestyle, marking the third consecutive year where a majority has held this concern.
Election Implications
The declining economic confidence index highlights Americans' mounting concerns over inflation, financial stability, and the broader economy. As pressures on household finances persist, political leaders and policymakers must address these issues to restore confidence. The sustained worries could play a significant role in shaping the outcome of the upcoming elections and future economic policies.
