Expectations for future standard of living drops more than current satisfaction
PRINCETON, NJ — In yet another sign that partisan wrangling over the federal budget is rattling the American consumer, Gallup’s Standard of Living Index has tumbled eight points in the past month to 31, its lowest reading since January.
The index is a summary of whether Americans are satisfied with their current standard of living and perceive it as getting better or worse. Although the index has a theoretical maximum of 100 (and a theoretical minimum of -100), the highest it has been since tracking began in 2008 is 45, attained in May 2013.
The recent decline echoes sentiments seen in Americans’ broader attitudes about the U.S. economy, although the magnitude in the decline in the Standard of Living Index is not as great. Gallup’s Economic Confidence Index faltered during the run-up to the government shutdown in late September, and has fallen further in October since the shutdown began, for a total decline of 24 points since mid-September.
Mainly a Crisis of Optimism
Both components of the Standard of Living Index have soured since mid-September; however, the decline in Americans’ outlook for their standard of living has been steeper, dropping nine points, compared with a six-point drop for current satisfaction.
Longer term, since the start of August, Americans’ net satisfaction with their standard of living has varied relatively little — generally registering in a four-point range between 47 and 51, except for the one reading of 53 in mid-September. By contrast, net optimism about one’s standard of living has registered in a 12-point range, from scores of 27 to 15.
Index Is Down Among All Income Groups
The eight-point decline in the index over the past month is seen fairly evenly across major income groups. At the same time, perceptions of standard of living soured more with Democrats and Republicans than among independents, whose standard of living rating was already relatively low.
Gallup’s Standard of Living Index now matches the low for this year, last recorded in early January, shortly after the Congress passed an 11th-hour budget agreement that avoided sending the federal government over a so-called “fiscal cliff.” That kind of drama has been replayed in the past month with similar effects on Americans’ confidence in the economy and their standard of living. The good news is that, while the current Standard of Living Index — at 31 — is down from the heights it reached earlier this year, it remains higher than the lowest readings in each of the previous five years. This indicates that, while the bottom has not yet fallen out of Americans’ satisfaction with their standard of living, there is the capacity for it to fall even further.