Worsening Attitudes

Americans have given their economy a vote of no confidence. Or at least, very little confidence.

CATHERINE RAMPELL

Dollars to doughnuts.

Gallup’s latest survey shows that Americans are considerably more pessimistic now than they were a year ago. Here’s a chart showing Gallup’s Economic Confidence Index for 2010 and 2011:

Dollars to doughnuts.

The index is based on daily interviews with 500 adults across the country, or about 3,500 people each week. Respondents are asked whether the economy is getting better or worse, and whether current economic conditions are “excellent,” “good,” “only fair” or “poor.” For each question, Gallup subtracts the percentage of people answering negatively from the percentage of people answering positively.

Then the two results are averaged to come up with a value that Gallup calls the Economic Confidence Index. A negative index value means that Americans are more pessimistic, and a positive value means they are more optimistic.

As you can see, the latest index measure was negative 49 (with a margin of error of 2 percentage points), compared to negative 29 a year ago.

Americans have been down on the economy for several years now. The index hit its recession-era monthly low of negative 60 in October 2008, and the highest level it has touched since then was a mere negative 21 (this past January).

These trends are concerning because worries about a poor economy can become self-fulfilling (or at least, self-perpetuating). If people believe the economy will get worse, they’ll hold back on spending and hiring, causing the economy to actually get worse.

The Toll of Politics on Well-Being

With Americans’ confidence in government at historic lows, it may not be surprising to learn that people are so fed up with politicians and politics that even talking about them makes people feel worse about their lives.

That’s one of the conclusions of a new study, “The Financial Crisis and the Well-Being of Americans,” by Angus Deaton, an economist at Princeton University. In the working paper, issued by the National Bureau of Economic Research, Mr. Deaton examines data from the Gallup Organization, which polls people on how they feel about various aspects of well-being, including their level of happiness, stress and anger and whether they are satisfied with their standard of living.

One of the intriguing findings is that the order in which Gallup posed questions affected the way people reported these various measures of well-being.

When the pollsters asked questions about respondents’ plans to vote, their preferred candidates, their approval ratings of the president’s performance and whether the country was headed in the right direction, the respondents reported increased levels of stress and anger.

“People appear to dislike politics and politicians so much that prompting them to think about them has a very large downward effect on their assessment of their own lives,” Mr. Deaton reported. In fact, he wrote, “the effect of asking the political questions on well-being is only a little less than the effect of someone becoming unemployed.”

On the other hand, there were some unexplained spikes in people’s assessment of their well-being. One of the largest increases came on April 6, 2009, a day that did not stand out for its obvious contribution to happiness or standard of living. Perhaps you can find a rationale in the main events of the day: there was an earthquake in L’Aquila in Italy, Robert Gates announced the military budget and Carrie Underwood won a Country Music Award.

Washington, Capital of Economic Optimism

CATHERINE RAMPELL

Dollars to doughnuts.

In case you’re wondering why Congress spent so much time twisting itself in knots over the long-term deficit, instead of over the current jobs crisis, this might help explain things: Washington, D.C., is the most economically optimistic area in the nation, according to Gallup.

Dollars to doughnuts.

Every day Gallup polls Americans across the country about whether they think current economic conditions are good (or “excellent,” “only fair” or “poor”), and whether the economy is getting better or worse. For each question, Gallup subtracts the percentage of people answering negatively from the percentage of people answering positively. Then the two results are averaged to come up with a value that Gallup calls the Economic Confidence Index.

If the index value is above zero, that means that people are generally confident about the economy. If the index value is below zero, then people are more pessimistic about the economy.

And guess what? Not only does Washington have the highest index value of any state or district in the country, it’s also the only place where the index value is positive.

Here are the top 10 states in terms of overall economic confidence:

These results are based on telephone interviews with 87,634 employed adults, 18 or older, conducted from January to June 2011 as part of Gallup Daily tracking. For each state, the margin of sampling error ranges from plus or minus 1 percentage point (for large states such as California), to plus or minus 8 percentage points (for the District of Columbia).

The biggest gap between the District of Columbia and the rest of the country is created by the second question used to create the Economic Confidence Index, on whether the economy is getting better or worse.

In every state, a majority of residents think the economy is getting worse. In the nation’s capital, however, a full 60 percent of people think the economy is getting better.

This may be good evidence for those arguing that Washington exists in its own disconnected bubble. At the very least, Gallup’s results show that the District of Columbia thinks very differently about the state of the economy than the rest of the country does.