Optimism About Economy Higher

From 24/7 Wall Street:

Americans believe, by a wide margin, that the economy will be better in 2011 than it was in 2010. As a matter of fact, “Twice as many Americans think the U.S. economy will be better rather than worse in 2011,” according to Gallup. Forty-four percent of those asked believe that their financial situation will improve in 2011 compared with 16% who believe their situations will get worse.

It is much too early to say whether these figures are a “false positive.” Data about consumer sentiment from The Conference Board and the Thomson Reuters/University of Michigan numbers have moved both positive and negative without warning. These statistics surprise analysts more often than not.

The best explanation for the improvement in the Gallup numbers may be an extension of the Bush Tax Cuts. Most Americans believe this will give them more discretionary income this year. The higher price of gas and other commodities could take away all of those tax savings quickly. That, in turn, would take consumer confidence back down again.

Consumers watched their fellow Americans wander malls and stores as they spent more than they did last year or in 2008 during the holiday season. That caused some amount of optimism about how well the economy will be next year. Many of those purchase will build more consumer debt, some of it which carries 21% interest rates.

The end of the first quarter will be a better time to look at the way that Americans view their economic lives and that of the country. They will have gotten their credit card bills. They will see if a friend or family member gets a job after months of looking. They will see whether Congress is at all serious about legislation which should benefit the economy quickly.

There is little more than uncertainty about how the next three months will be for individuals and their finances. Three months can be a long time.

Survey method: Results for this USA Today/Gallup poll are based on telephone interviews conducted Dec. 10-12, 2010, with a random sample of 1,019 adults, aged 18 and older, living in the continental U.S., selected using random-digit-dial sampling.

Link:  Optimism About Economy Higher