Economic Confidence Falls: Why Some Consumers Still Have It

Washington, D.C.
Washington, D.C.

Consumers who live in the District of Columbia have more economic confidence than residents of any other part of the country, according to a new Gallup poll. Maryland and Virginia also rank in the top 10 for consumer confidence.

One reason could be that government employment is still relatively strong near the nation's capitol -- at least for now, Gallup says. That could change as federal austerity makes its way through the system.

Sponsored Links

Overall, U.S. economic confidence has fallen. In the first half of the year, Gallup's Economic Confidence Index averaged -28 nationwide, falling slightly from the first six months of 2011, when the index averaged -26. The score reflects "Americans' pessimistic views of the current and future U.S. economy," according to the polling firm, which characterized the change in the index as essentially flat from last year.

Other states in the top 10 include North Dakota, South Dakota. Nebraska, Utah, Iowa, Minnesota and Massachusetts. These states produce commodities, a business that been helped by the demand for food, and Gallup believes that production has helped to keep confidence high.

The Unemployment Factor

But one of the biggest reasons some states are more confident than others may be simpler than that. According to the Bureau of Labor Statistics, June unemployment numbers were low in many of Gallup's most confident states, including North Dakota, South Dakota, Nebraska, Virginia, Minnesota, Iowa, Utah and Maryland. Many of the states with high unemployment also ended up scoring low on economic confidence.

Gallup attributes the low confidence, in some states, to other reasons. It reports that "the after-effects of the Gulf oil spill are evident as Louisiana, Mississippi and Florida joined the bottom 10 states. Other low-confidence states like Nevada continue to suffer from the bursting of the housing bubble." But, Nevada, Florida, Rhode Island, Mississippi, Florida and Kentucky -- which are all on Gallup's worst 10 list for economic confidence -- also are among the states with the highest unemployment.

Gallup may have a set of sophisticated reasons for how the states are positioned on the list. But there may be only one important reason -- unemployment.

Gallup's Economic Confidence Index is based on two questions: the first asking consumers to rate their perceptions of current economic conditions as "excellent," "good," "only fair," or "poor," and the second asking them whether economic conditions in the country are "getting better" or "getting worse." The results are based on telephone interviews with 87,634 employed adults, aged 18 and older, conducted between January and June.