Americans' Dour Economic Attitudes Little Affected by Katrina Americans very negative on economy both before and after hurricane
by Frank Newport GALLUP NEWS SERVICE
PRINCETON, NJ -- What has been the impact of Hurricane Katrina on consumer confidence in the United States economy? Gallup's first September update on Americans' views of the economy suggests that the hurricane may be having little effect at all. Confidence in the economy, which was low and dropping in August just before Katrina's landfall, continues to be low in September, showing little change in either direction after the events of the last few weeks. Economic concerns remain the most important problem facing the country -- again, little changed from August.
Gallup's new economic update does show, however, a slight uptick in Americans' perceptions that inflation and unemployment will increase in the months ahead.
These results are based on Gallup's sample of 921 Americans interviewed Sept. 12-15, and are compared against more than 2,000 interviews conducted at two points in August.
The Economy
Americans were very much down on the economy before Katrina. Sixty-three percent of Americans in Gallup's Aug. 22-25 economic update said economic conditions were getting worse in the country as a whole, while only 28% said they were getting better. That was as low as had been measured since March 2003.
Now, after Katrina, there has been little change. Americans remain deeply pessimistic, with only a slight and statistically insignificant increase in the negative perceptions of the economy's direction.
Ratings of current economic conditions in the country were relatively negative in August, and remain so now. Thirty-one percent of Americans now rate the economy as excellent or good, while 44% say it is "only fair" and 25% say it is poor. Those numbers are little changed from August.
In both instances, then, the data suggest little support for the hypothesis that the hurricane itself has made a material difference in Americans' confidence in the U.S. economy. The August Gallup surveys showed that Americans were particularly troubled by the increase in gas prices, but despite the fact that prices have spiked even higher as a result of Katrina, there does not appear -- at least at this point -- to have been further erosion in the public's views of the economy.
Most Important Problem
Katrina neither amplified Americans' perceptions that the economy is the nation's top problem, nor did it diminish them.
Asked to name the most important problem facing the country, 32% of Americans in the Sept. 12-15 survey mention some aspect of the economy, a figure that is roughly comparable to what Gallup measured in August and the months that preceded.
Thirteen percent of Americans mention some aspect of Katrina or disaster relief and disaster funding as the nation's top problem. That is, of course, up from 0% in August. The big change in response to this "most important problem" question between August and September involves the salience of Iraq. While 27% of Americans said Iraq was the nation's top problem in August, only 16% mention it now in the aftermath of Katrina.
In short, the hurricane has -- at least temporarily -- lowered the top-of-mind salience of the Iraq war for Americans, but it has done little to change the perceived importance of the economy as a problem facing the nation.
Inflation and Unemployment
One of the concerns about the economic impact of Katrina has been inflation. Not only have gas prices spiked, but there has been speculation that the price of many other goods and services may increase as well. Americans seem mindful of this possibility. The new poll finds that 76% believe inflation will go up over the next six months, including 33% who say it will go up a lot. That's the highest expectation of an increase in inflation that Gallup has measured since this tracking trend began in October 2001 (although in May of this year, 74% said inflation would go up).
There has also been an increase in views that unemployment will increase in the next six months, from 44% who said it would go up a little or a lot in August to 52% this month. This change may well be a direct result of Americans' views that the hurricane put people living in the Gulf Coast out of work, at least temporarily.
Spending
It's rare to find major changes in Americans' spending plans. Survey after survey shows that the plurality or even the majority of Americans say their spending plans will remain the same rather than increasing or decreasing over the coming six months.
In the latest survey, 29% of Americans say their spending will increase over the next six months, 29% say it will decrease, and 42% say it will remain the same. That's not materially changed from Gallup's August poll or from polls conducted in previous months this year.
It appears obvious that Americans' actual retail spending is not always directly correlated with attitudes expressed in surveys. Too many factors like discounts, sales, introductions of highly desired products, and even the weather can affect spending regardless of the consumer's mood. Still, it would not be out of the question to assume that Katrina and its aftermath might affect the public's stated intentions about spending. That has not happened. There is no sign from these data that Katrina or the run-up in gas prices has significantly affected Americans' self-reported spending plans.
Survey Methods
Results are based on telephone interviews with 921 national adults, aged 18 and older, conducted Sept. 12-15, 2005. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.
In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
The poll did not dial into some of the areas of Louisiana and Mississippi that were declared federal disaster areas following Hurricane Katrina. This amounts to about 0.75% of the U.S. population.