U.S. economic confidence improved sharply to -18 in the week ending March 11 from -25 the prior week, Gallup said Tuesday. That's the best reading since the week ending Feb. 13, 2011, when it was also -18. (Index readings are calculated by taking the percentage of respondents who say the economy is improving and subtracting the percentage of people who say things are getting worse.)
Although still negative, the -18 readings are the best weekly levels Gallup has recorded since it started tracking confidence daily in January 2008. See the chart of economic confidence, courtesy of Gallup, below:
"It appears that higher gas prices have not been enough to keep Americans' economic confidence from matching its highest weekly level in four years," writes Dennis Jacobe, Gallup's chief economist, in a new report.
Americans' confidence in the economy surged last week at least partly because of Friday's, Jacobe says. The government reported 227,000 jobs were added in February, while the unemployment rate held steady at 8.3 percent.
"This improvement in consumer perceptions is taking place despite sharply higher gas prices at the pump," Jacobe notes. "Gallup data find gas prices would need to climb to more than $5 per gallon before consumers would need to significantly alter their lifestyles."
However, the good feelings may be short-lived, the economist says. Americans' confidence in the economy was at a similar level this time last year, only to be hurt when economic growth weakened in the following months. "In fact, by last summer, the economy appeared to be near another downturn as politicians in the nation's capital did battle over raising the federal debt ceiling," Jacobe writes.
Additionally,and any failure to maintain the pace of hiring could quickly change Americans' mood.
"If job increases slow, gas prices may quickly be perceived as an even more important threat, not only to Americans' economic confidence, but also to the overall economy in the months ahead," says Jacobe.