Confidence in economy grows since Trump’s win, Gallup poll shows
By Tim Grant / Pittsburgh Post-Gazette
On the heels of a contentious presidential campaign, Americans are feeling more enthusiastic about the way the economy is heading than they have in almost a decade.
In the month since Donald Trump’s election win Nov. 8, stock markets have soared and a recent Gallup poll shows Americans have become more optimistic about the future of the U.S. economy than at any other time during the nine years that Gallup has been tracking the U.S. Economic Confidence Index.
The latest Gallup poll score of +6 for the week ending Nov. 27 inched past the previous high of +5, recorded in January 2015.
Americans’ confidence in the economy shifted from negative to positive territory after the election. Mr. Trump will take office in January. The index was -11 in the last full week before the Nov. 8 election, but jumped to +4 the week after and has climbed since then.
Gallup noted that the change was largely attributable to Republicans becoming more optimistic about the economy’s direction. The index has a theoretical maximum of +100 if all Americans surveyed were to say the economy is doing well and improving, and a theoretical minimum of -100 if all Americans surveyed were to say the economy is doing poorly and getting worse.
“Stock prices have done well in the wake of the election. People are wealthier and that encourages confidence as well,” said Gus Faucher, deputy chief economist at PNC Bank, Downtown. “The economy is the same as before the election. The difference is some people feel the economic prospects are better now.”
Mr. Faucher pointed out that many of the important economic indicators have been moving in the right direction since the end of the Great Recession in 2009. The national unemployment rate of 4.6 percent is as low as its been since 2007. It peaked at 10 percent in October 2009. Job losses ended in 2010 and since then the economy has added 15.4 million jobs.
Mr. Faucher said inflation was 1.6 percent in October, well below its long-run average.
More jobs, more income and low inflation may also have played a role in retailers around the country reporting one of the best Black Fridays on record.
According to a survey by the National Retail Federation, the average American spent $290 on consumer items the day after Thanksgiving. While shoppers spent more last year — $300 — there were more of them this year. Overall, consumers spent $3 million more this year for a total of $154 million.
Still, it may be too early to tell whether the uptick in confidence will last beyond January.
Strong consumer confidence is a sign that the economy is gaining steam. But it could also be a warning of potential setbacks in the years ahead, said Aaron Leaman, a financial adviser with Signature Financial Planning in Mt. Lebanon.
“Historically when the Consumer Confidence Index rises to a high point, it typically means a recession will happen a few years down the road,” Mr. Leaman said. “As markets go up, consumer confidence goes up, and it usually marks a high-point in the economy.
“I believe we will see a very strong holiday season, which will give the Federal Reserve cover to raise rates,” he said. “Then I think we will see an expectation reset after Trump’s inauguration.”
With a Republican president and a Republican majority in both houses of Congress, legislation is likely to be passed more quickly than it has been over the past eight years under a Democratic administration that was often hindered by gridlock.
“We will see a lot of legislative action in the first three months of the year and people will be looking closely at that,” Mr. Leaman said. “Confidence could keep going up. Or people could take a more wait-and-see attitude. There will be a lot of changes and people will want to see those changes and make up their minds.”
The Gallup poll emphasized that it’s not just Americans who are feeling more optimistic since the election. Potential U.S. economic growth could have significant effects worldwide, and many foreign investors have played a role in U.S. markets skyrocketing since the election.
“While the election’s results may have improved Americans’ outlook on the economy, favorable market conditions may have driven their confidence further upward,” according to the Gallup report. “But two weeks of positive index readings on the heels of [Mr. Trump’s] unexpected victory reveals a degree of economic confidence Americans have not expressed since the recession.”
The Dow Jones closed above 19,000 on Thursday for the first time in its 120-year history.
Financial adviser P.J. DiNuzzo, chief investment officer for DiNuzzo Index Advisors in Beaver, said capital markets are predicting potential benefits of favorable legislation or executive orders generated by Mr. Trump.
“The market is a short- to intermediate-term pricing mechanism,”Mr. DiNuzzo said. “It appears there is a consensus at this time that the Trump presidency will enhance overall economic growth.”
By Tim Grant / Pittsburgh Post-Gazette
On the heels of a contentious presidential campaign, Americans are feeling more enthusiastic about the way the economy is heading than they have in almost a decade.
In the month since Donald Trump’s election win Nov. 8, stock markets have soared and a recent Gallup poll shows Americans have become more optimistic about the future of the U.S. economy than at any other time during the nine years that Gallup has been tracking the U.S. Economic Confidence Index.
The latest Gallup poll score of +6 for the week ending Nov. 27 inched past the previous high of +5, recorded in January 2015.
Americans’ confidence in the economy shifted from negative to positive territory after the election. Mr. Trump will take office in January. The index was -11 in the last full week before the Nov. 8 election, but jumped to +4 the week after and has climbed since then.
Gallup noted that the change was largely attributable to Republicans becoming more optimistic about the economy’s direction. The index has a theoretical maximum of +100 if all Americans surveyed were to say the economy is doing well and improving, and a theoretical minimum of -100 if all Americans surveyed were to say the economy is doing poorly and getting worse.
“Stock prices have done well in the wake of the election. People are wealthier and that encourages confidence as well,” said Gus Faucher, deputy chief economist at PNC Bank, Downtown. “The economy is the same as before the election. The difference is some people feel the economic prospects are better now.”
Mr. Faucher pointed out that many of the important economic indicators have been moving in the right direction since the end of the Great Recession in 2009. The national unemployment rate of 4.6 percent is as low as its been since 2007. It peaked at 10 percent in October 2009. Job losses ended in 2010 and since then the economy has added 15.4 million jobs.
Mr. Faucher said inflation was 1.6 percent in October, well below its long-run average.
More jobs, more income and low inflation may also have played a role in retailers around the country reporting one of the best Black Fridays on record.
According to a survey by the National Retail Federation, the average American spent $290 on consumer items the day after Thanksgiving. While shoppers spent more last year — $300 — there were more of them this year. Overall, consumers spent $3 million more this year for a total of $154 million.
Still, it may be too early to tell whether the uptick in confidence will last beyond January.
Strong consumer confidence is a sign that the economy is gaining steam. But it could also be a warning of potential setbacks in the years ahead, said Aaron Leaman, a financial adviser with Signature Financial Planning in Mt. Lebanon.
“Historically when the Consumer Confidence Index rises to a high point, it typically means a recession will happen a few years down the road,” Mr. Leaman said. “As markets go up, consumer confidence goes up, and it usually marks a high-point in the economy.
“I believe we will see a very strong holiday season, which will give the Federal Reserve cover to raise rates,” he said. “Then I think we will see an expectation reset after Trump’s inauguration.”
With a Republican president and a Republican majority in both houses of Congress, legislation is likely to be passed more quickly than it has been over the past eight years under a Democratic administration that was often hindered by gridlock.
“We will see a lot of legislative action in the first three months of the year and people will be looking closely at that,” Mr. Leaman said. “Confidence could keep going up. Or people could take a more wait-and-see attitude. There will be a lot of changes and people will want to see those changes and make up their minds.”
The Gallup poll emphasized that it’s not just Americans who are feeling more optimistic since the election. Potential U.S. economic growth could have significant effects worldwide, and many foreign investors have played a role in U.S. markets skyrocketing since the election.
“While the election’s results may have improved Americans’ outlook on the economy, favorable market conditions may have driven their confidence further upward,” according to the Gallup report. “But two weeks of positive index readings on the heels of [Mr. Trump’s] unexpected victory reveals a degree of economic confidence Americans have not expressed since the recession.”
The Dow Jones closed above 19,000 on Thursday for the first time in its 120-year history.
Financial adviser P.J. DiNuzzo, chief investment officer for DiNuzzo Index Advisors in Beaver, said capital markets are predicting potential benefits of favorable legislation or executive orders generated by Mr. Trump.
“The market is a short- to intermediate-term pricing mechanism,”Mr. DiNuzzo said. “It appears there is a consensus at this time that the Trump presidency will enhance overall economic growth.”
