Gallup finds confidence in economy tanking

Confidence in the U.S. economy has deteriorated rapidly over the last month, a new Gallup survey out Tuesday found.

The Gallup Economic Confidence Index has slipped to -53 by Aug. 7 from -43 two weeks earlier and -34 one month ago. The -53 figure is just 12 points away from the confidence measure at the height of the 2008 financial crisis.

The index combines two measures of Americans’ views about whether the economy is getting better or worse, and about whether current economic conditions are good.

At this point, 77 percent of Americans say the economy is getting worse, down from 64 percent a month ago. Fifty-five percent of those surveyed said the economy was “poor,” up from 45 percent a month ago.

In its analysis, Gallup says more attention should be paid to the impact of the debt-ceiling debate on Main Street confidence, as opposed to investor confidence. It warns that the survey has yet to measure the full fallout of Friday’s Standard & Poor’s downgrade of the U.S. credit rating to AA+ and that the index could reach the levels seen in 2008.

Confidence in the economy plays a key role in economic growth, and the fear and uncertainty of the last few weeks could push the economy into a double-dip recession, economists warn.

With stimulus spending apparently off the table, eyes will be on the Federal Reserve’s Federal Open Market Committee, which meets Tuesday in Washington, for a path out of a downward spiral.

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