Consumer confidence climbs at year’s end

Washington--While U.S. consumer confidence is improving, Gallup’s Economic Confidence Index still ended the year in negative territory, and Gallup said the federal government will need to learn to work together to boost it into the positive.

The Gallup Economic Confidence Index averaged -17 during the week of Christmas, an improvement from the -39 of mid-October but still below the 2013 peak of -3, measured in early June.

Gallup measures confidence by gauging how Americans feel about both the current economic conditions and the economy’s future.

Americans’ economic confidence saw vast improvement in the weeks immediately following the end of the federal government shutdown, which occurred from Oct. 1 to 16. The index climbed 10 points in the three weeks after the shutdown but has since risen at a slower pace, improving 12 points in the past eight weeks.

Gallup said positive economic news over the past two months could have played a role in the index’s steady improvement, including the unemployment rate dropping to a five-year low, record highs in the stock market and improvements in the housing market.

In addition, U.S. gross domestic product grew more than economists expected in the third quarter, and in early December the Federal Reserve eased its bond-buying stimulus program.

Americans are more positive about current, future economy
During the week of Christmas, Americans were more likely to say that current economic conditions were “excellent” or “good” than “poor,” resulting in a net current conditions score of -16, up from -32 during the shutdown but below the -9 measured in June, Gallup said.

Still, the index shows that U.S. consumers are still more pessimistic than optimistic about the economy’s outlook, with 56 percent saying it is getting worse, not getting better. This resulted in a -18 score for economic outlook for January 2014, an improvement from the -46 recorded in the shutdown but below the +4 measured in late May and early June.

Implications
Despite the sharp drop in consumer confidence during the federal government shutdown, the index showed that Americans were more confident in the economy in 2013 than they were in the past six years.

Gallup’s Economic Confidence Index averaged -16 for the year, up from -21 in 2012. The -16 is the best score since the company began tracking economic confidence daily in 2008.

For the index to enter positive territory in 2014, consumers may need to