Consumer confidence down, not good for Obama
Customers shop at Bloomingdale's in Merrimack, N.H. According to Gallup, consumer confidence is measuring in the negative right now.
Tess Vigeland: As the economic recovery slows -- and that is what it's looking like lately -- so goes consumer confidence. But how are people feeling these day about things?
Frank Newport is the editor-in-chief of Gallup, he's here every week to give us an Attitude Check on what Americans really think about the economy and other issues of the day. Frank, good to talk to you again.
Frank Newport: Good to be with you.
Vigeland: All right, let's talk consumer confidence. How are folks feeling about the economy?
Newport: Not good.
Vigeland: Uh oh. All right, so where does that put us?
Newport: Well, let me quantify it for you first: Our economic confidence measures minus 26 -- and you ask what that means. Well, zero would be where things are on an even keel, so that minus 26 means we're underwater, right, attitudinally? Not as bad as it could get -- it was minus 65 back in '08. But the minus 26 is negative, not positive.
Vigeland: Do we know why there has been this dip at this point in the year?
Newport: Now that's an excellent question, and a lot of us are scratching our heads. We've done a lot of analysis. Typically, there is a correlation between consumer confidence and the Dow. But the Dow generally, after dropping at the beginning of the month, has been up, so that's not working. Gas prices have been getting a lot better, and yet consumer confidence has been getting worse. So that's not predicting much. What we think it might relate to is news. We do know from some research we've done, it's related to the sentiment in the news -- there's the European crisis going on. And we really think there may be some implications of what's going on in Washington: uncertainty; waiting for the health care ruling; problems with Congress not acting on all the things that may happen later in the year and the election. That may be part of why consumers aren't all that confident. And they're probably still worried about jobs.
Vigeland: Yeah, so they're just basically, it sounds like a general sense of unease has returned. So what are the ramifications of that?
Newport: Politically, they're interesting ramifications. Our work shows that President Obama would want to have this index at about a minus 15, because that predicts about a 50 percent job approval rating. So if consumer sentiment remains low or below that level as it is now, that's not a good predictor for his re-election probability. Whether or not it means consumers won't spend, which a lot of people assume, is less clear in the data.
Vigeland: All right, well we've still got, what, four or five months until the election, so is there anything in the polling that suggests this might change at all?
Newport: You know, the direction of the economy is one of the components of our consumer confidence. We now have 58 percent counted. Fifty-eight percent of Americans say the economy's getting worse, not better -- and that's not the kind of measure an incumbent president would like to have. Whether that will change or not, I think we're going to wait and see. We've got the health care ruling, we have a week from Friday the announcement of the June unemployment numbers -- so a lot of information will come in. But right now, we don't know whether it will change, but it's not auspicious for President Obama.
Vigeland: All right, looking into that crystal ball there. Frank Newport, the editor-in-chief of Gallup. Thanks so much.
Newport: My pleasure.