A Better U.S. Economic Outlook

The U.S. economy is getting better, according to Gallup.

Gallup’s key U.S. economic indicators tell a consistent story of improving economic and behavioral conditions. Americans’ self-reported employment status, personal spending and workplace hiring trends were all better in March than in February. They were improved over March 2011, as well, though still below prerecession levels. In addition, Americans’ ratings of the U.S. economy were at a four-year high. However, that was prior to last week’s disappointing Bureau of Labor Statistics jobs report and Wall St.’s latest downturn. Those events could spark another reversal, like so many others that have occurred since 2009. Thus far, Gallup indicators suggest otherwise.

Interestingly enough, the research made no mention of gasoline and other energy prices, which have become one of the single greatest dangers to improved U.S. gross domestic product. And Gallup admits confidence is fickle. It only takes one dip in the market or one poor unemployment number to shove optimism lower.

The problems with reports like these is that they are nothing more than a brief snapshot, even if they show a multiyear or multimonth trend. There were certainly long periods of optimism in 2005 and 2006 as home prices soared, unemployment dropped far below 6% and auto sales reached all-time highs. Americans had hundreds of billions of dollars in home equity. That made them feel rich. Everything was good, until it no longer was. It only took a few short months for the bad times to begin. Few polls caught the change early. Today, the new Gallup data is not a reflection of their feelings. In the opinions of many Americans who are out of work or work only part time, those who still have credit leverage problems or who cannot get credit to fund their businesses, optimism is in short supply.

Gallup’s economic data probably provide a service. A few weeks of optimism among Americans as they look at the economy is a change from the past few years, even if it might be fleeting. Should the research eventually show a long string of months in which Americans “feel better,” then the real recession, the one that has taken hold household by household, will have ended.

Douglas A. McIntyre