For the first time since the Great Recession, polls are finding a majority of Americans with positive feelings about the economy.
The shift doesn’t mean the economy is moving into overdrive, nor does it alleviate the challenges that millions of Americans still feel – from stretched family budgets to unemployment.
But it does signal a potentially important transition.
After years of sluggish recovery, the job market last year posted its strongest employment gains since the 2007-09 recession. Forecasters say annual economic growth could reach 3 percent this year for the first time since 2005. And the progress is starting to be felt by growing numbers of workers and consumers.
A Gallup index of economic confidence had a positive reading (+1) in the week ending Jan. 4. That was the second positive week in a row after a string of downbeat readings going back to the recession, Gallup announced Tuesday. The index blends people’s view of the current situation with their outlook for the future.
Similarly, in late December, a CNN/ORC poll found that 51 percent of Americans rated the economy as “somewhat good” or “very good,” the first time in seven years that a majority of Americans have said that.
And a monthly survey of consumer sentiment by Thomson Reuters and the University of Michigan has reached its highest level in eight years.
“Importantly, rather than basing their renewed optimism on volatile oil prices, consumers have become convinced that growing strength in the national economy will result in continued gains in jobs and wages during the year ahead,” economist Richard Curtin said in releasing the December survey.
By itself, a better mood doesn’t mean those hopes will be fulfilled. But some economists say conditions could be ripe for consumer spending to strengthen and for economic growth to surprise on the positive side of current forecasts.
The rising confidence coincides with improvements in home values and a high stock market (even after recent dips), which bolster household wealth. Plunging oil prices act like a tax cut, putting more money in consumer pockets to use for other things. The job market and the climate for getting approved for loans also continue to improve.
The nation’s official unemployment rate has fallen below 6 percent of the labor force. But economists still see lots of room for improvement in the job market. A strengthening economy should start to pull labor-force dropouts back into the hunt for jobs.
In a December survey of consumer confidence by the nonprofit Conference Board, more people said jobs are “hard to get” (27.7 percent) than that jobs are plentiful (17.1 percent), hinting at the job-market weakness that remains.
More broadly, that’s a reminder that lots of Americans still aren’t feeling economic good times.
The monthly Christian Science Monitor/TIPP poll in December found Americans feeling moderately positive about the outlook for their own personal finances, but the responses varied widely by income. High-income respondents were the most upbeat.
In the below-$30,000 income group, more people said they expected their finances to worsen over the next six months (23 percent said this) than to improve (20 percent).