Optimism about the direction of the national economy took its steepest tumble in nearly 13 years in the latest Consumer Comfort survey, with the number of Americans who say the economy is improving falling by 11 percentage points from mid-August to mid-September.
Twenty-seven percent say the economy is getting better, down from 38 percent last month in its largest one-month decline since October 2008. Forty percent see a worsening economy, up 7 points to the most since January. The rest, 33 percent, think it’s staying about the same. It’s the first time since March that more people have said the economy is getting worse rather than improving.
The result aligns with other recent surveys showing worsening forward-looking economic sentiment. Two of three present-day assessments in the weekly Consumer Comfort Index also softened this week, albeit far less dramatically.
The overall CCI is down a slight 1.4 points this week, and 1.9 points from its pandemic peak in late August, to 56.3 on its 0-100 scale. Ratings of the national economy are down 2.0 points this week to 50.8, while Americans’ assessments of their personal finances are down a slight 1.4 points to 69.0. Ratings of the buying climate, at 49.1, are in their fourth week without a significant shift.
The expectations question is asked on a monthly basis, separately from the CCI, because forward-looking and current-conditions views are substantively different and can move in different directions. Expectations are speculative; views of current conditions, especially in terms of personal finances and the buying climate, are more experiential.
The drop in optimism, while distributed across groups, is particularly sharp among those with annual household incomes less than $50,000 (-16.2 points) compared with higher earners (-4.7 points). It was down 20.5 points among Democrats and 12.7 points among Republicans, with essentially no change among independents.
The current -13-point better-worse margin its lowest since January. It was far worse in the initial months of the pandemic when pessimism outstripped optimism by more than 3-1. It’s also slightly better than its long-term average in data since March 1986, -17 points.
Each of the CCI’s current-sentiment gauges have retreated from recent highs: The national economy subindex is 4.0 points off its pandemic peak three weeks ago, with losses concentrated among Republicans (-9.7 points), Americans in households with annual incomes less than $50,000 (-9.2 points), Southerners (-8.7 points) and women (-6.3 points). The personal finances subindex is 2.0 points lower than its 16-month high four weeks ago and the buying climate subindex is 1.6 points off its best of the pandemic in mid-June.