–Gallup Weekly Index Gains Concentrated Among Democrats, Independents

By Kasra Kangarloo

WASHINGTON (MNI) – The Democratic National Convention appears to
have provided a boost to the nation’s economic confidence, though the
bump may not translate to headline consumer confidence data and may be
temporary, according to interviews with economists by MNI.

The evidence for a bump in confidence stems from two sources:
Gallup’s weekly economic confidence index, which jumped 11 points to -18
for the week ending September 9, the highest level since May; and the
September IBD/TIPP economic optimism index, which rose 6.2 points to the
highest level since January 2011.

This is the biggest one-week jump in the Gallup index since its
inception in early 2008. The survey’s findings were partially taken from
surveys conducted during the weekend, which followed the release of the
disappointing August employment report by the Labor Department.

The increase was highly concentrated in the Democratic portion of
the survey, which showed a 17-point jump to 24. Independents also
registered a sizable jump, rising 13 points to -22. The Republican
portion was virtually unchanged at -59.

“The [Democratic National Convention] appears to have given
Democrats and, to a lesser degree, independents, fresh optimism about
the economy,” the Gallup report notes.

The IBD/TIPP report also noted the impact of the convention among
the survey’s Democratic respondents, with TIPP president Raghavan Mayur
stating “Democrats’ upbeat sentiment after the convention and recent
stock market gains contributed to the optimism.”

The index rose primarily off its 6-month outlook sub-index, which
jumped 10.7 points, perhaps due to the rosier mood among Democrats about
the country’s future.

Economists interviewed by MNI believe that a bounce in the two
most-watched reports of consumer confidence — the University of
Michigan’s consumer sentiment survey and the Conference Board’s consumer
confidence index — was at least possible for the month of September,
though there were disagreements about the conflicting effects from other
economic news.

Kevin Harris, an economist for Informa Global Markets, stated that
though the conventions could boost the University of Michigan survey in
the short-term, the recent strength of the stock market would ultimately
have a much larger effect.

“Stocks are pretty high right now,” Harris said in a telephone
interview, “and that is independent of the [convention].”

The Dow Jones Industrial Average reached its highest level since
December 2007 on Tuesday and closed at 13,335 on Wednesday.

The University of Michigan’s survey is focused heavily on the
finances of its respondents, whereas the Conference Board’s survey is
more geared toward impressions of the job market.

Harris added that the partisan nature of the bump in confidence
also limited its relevance to the broader economy.

“The problem is that partisans are much happier after the
convention, but it’s not a broad indication of the mood of the country
if it’s driven by a partisan issue,” Harris said.

Mike Englund, an economist at Action Economics, believes that there
should be a modest bounce in both indices, though he noted that flashy
political events, including elections, are often followed by a temporary
bounce in consumer confidence.

“We’re going to get a couple weeks of bounce, followed by a couple
weeks of decline,” Englund said in a telephone interview. “You could see
the same thing after the election.”

Following the release of the IBD/TIPP report on Tuesday, Englund
revised his estimates for the University of Michigan and Conference
Board surveys slightly higher.

Harris differed on this point, noting that the Conference Board’s
index would be largely unaffected by the DNC, as it would likely be
overshadowed by the poor August jobs report released by the Labor
Department.

The nonfarm payrolls report for August showed an added 96,000 jobs
over the month, below market expectations, with the unemployment rate
falling off a sharp drop in the participation rate.

The weak jobs report, however, could also be enough to completely
overshadow any poitential bump from the DNC in either survey, according
to Yelena Shulyatyeva, an economist at BNP Paribas.

“It’s really the economy that people are worried about,”
Shulyatyeva said in a telephone interview. “Consumers are reacting to
payrolls numbers and the lack of developments in the labor market;
people are discouraged.”

The preliminary University of Michigan consumer sentiment report
for September will be released Friday at 9:55 a.m. ET. The index is
expected to rise slightly to 74.5, according to a survey of economists
by MNI.

The Conference Board’s September consumer confidence index will be
released Tuesday, September 25 at 10:00 a.m. ET.

–Kasra Kangarloo is a Washington reporter for Need to Know News

** MNI Washington Bureau: 202-371-2121 **

[TOPICS: MAUDS$,M$U$$$]