Americans’ economic optimism surged last week.
The latest reading from Gallup’s US Economic Confidence Index jumped by seven points to +16 in the period from February 27 to March 5, marking the highest weekly average in the index’s nine-year trend.
This follows a drop during the week between January 30 and February 5, which came after a huge jump in confidence in November and December following the election of US President Donald Trump.
Last week was pretty stacked in terms of economic and political developments.
Perhaps the most notable event was Trump’s address to Congress on February 28. The Dow blew through the 21,000 mark for the first time ever the following day. That rise came after his more measured tone reassured some investors – even though analysts said that the speech did not actually offer many new details on economic policy.
Moreover, Federal Reserve officials adopted a more hawkish tone last week, prompting speculation that the bank is gearing up for a rate hike at its March 14-15 meeting. And Federal Reserve Chair Janet Yellen said in a speech on Friday, “we currently judge that it will be appropriate to gradually increase the federal funds rate if the economic data continue to come in about as we expect.”
“It is impossible to know which of these events played the most important role in boosting Americans’ confidence last week, though it seems unlikely that Yellen’s remarks influenced the public much given her low name recognition,” Gallup’s Andrew Dugan wrote in the report. “Trump, meanwhile, commanded a large national audience, and his speech likely helped spark the stock market’s record-setting performance the next day.”
“Curiously, though, it was Democrats who showed the largest improvement in economic confidence from Wednesday to Sunday of last week, the period after Trump’s speech and the stock market rally,” he added.
Gallup calculates the index by taking the average of two components: how Americans rate current economic conditions and whether they feel the economy will improve or not in the near future. A score of +100 theoretically means all Americans said the economy is doing well and improving, while a reading of -100 would be the reverse.