Recent History Of This Indicator
Sales of total light motor vehicles fell 1.2 percent in January to a 16.7 million annual rate versus 16.9 million in December. Weakness is centered in foreign-made vehicles where sales fell 8.8 percent to a 3.1 million rate. Sales of North American-made vehicles fell 0.7 percent to a 13.5 million rate.
After scoring plus 3 in January, the first positive reading in seven years, Gallup’s Economic Confidence Index edged down to plus 1 in February. The reading last month is still the second-highest monthly average since Gallup began tracking confidence on a daily basis in 2008.
Gallup’s Economic Confidence Index is the average of two components: Americans’ ratings of current economic conditions and their views on whether the economy is getting better or getting worse. The index has a theoretical maximum of plus 100, if all Americans believe the economy is excellent or good and getting better; and a theoretical minimum of minus 100, if all Americans say the economy is poor and getting worse.
In Gallup Daily tracking throughout February, an average 27 percent of Americans said the economy was “excellent” or “good,” while 27 percent said it was “poor.” The resulting “0” current conditions score compares with plus 1 in January. Meanwhile, the economic outlook score decreased by three points to plus 2, based on 49 percent of Americans saying the economy is “getting better” and 47 percent “getting worse.”
The modest drop in Americans’ economic confidence in February reflects significantly different readings in the two halves of the month. Americans’ economic confidence indexed at plus 3 in each of the first two weeks of the month — on par with the January average — but was followed by a five-point drop to minus 2 in the third week of the month, and remained at that level last week.
The shift in the last two weeks of February marks the largest downturn in weekly economic confidence since last July. Although there are a number of possible causes for the drop, one probable explanation is the higher prices consumers are seeing at the gas pump, an unwelcome turn after seven months of declining gas prices. The average price per gallon of regular unleaded gas nationally rose three cents in the first week of February, then 12 cents in the second week, eight cents in the third and six cents in the fourth — 29 cents in total.
Gas prices started going up at least a week before Americans’ economic confidence began to sink, suggesting if there is a relationship between the two, it could depend on the cumulative effect after a series of short-term increases.
On the other hand, the stock market had its best month in more than three years in February, with the Dow Jones rising 5.6 percent and the Nasdaq up 7.1 percent. Thus, among the many economic signals consumers may respond to, rising gas prices appeared to overshadow rising stocks in February.