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American Morning

America's New War: Economic Pulse of America

Aired October 01, 2001 - 10:51   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: Frank Newport and the folks at Gallup have been taking the economic pulse of America with some surprisingly positive results when it comes to consumer confidence.

Frank is live in Princeton, watching the numbers for us. What did you find out, Frank?

FRANK NEWPORT, GALLUP: Well, Bill, consumer confidence is so important economists say it really can drive or not drive whether the economy is going to go up or not.

But we kind of reviewed the literature. We looked at all the different studies we could find to try to see where Americans are going, that is the consumers, and As you say, Bill, they're pretty positive.

First of all, let me just show you this mood indicator that we put together, and where it was right after the attacks. The bottom line is the spirits of America -- some people think this is paradoxical -- went up, not down after the attacks. This averages president's job approval satisfaction with the way things are going, and a rating of the economy. You can see in January, it was higher. It had fallen down to right before the attacks, but right after the attacks, it had jumped back up again, and that included an economic index.

Now a lot of people say, Bill, well that's just this rally effect that's going to die out, so we looked at a series of economic indicators, which it asked consumers about their confidence, both pre- and post-attack. We listed them for you here. We looked at them all, and in every single one of these, we did not find any evidence of consumer confidence dropping after the attacks. Now a couple of them show signs at the end of the month that it might be going down.

But basically, all of these measures, some of them very well know, show that there was no impact of the attack on consumer confidence.

So, Bill, what we are saying is, we are, at least for the moment, not accepting the hypothesis that the attacks are causing consumers to really tighten in and become very negative. It looks like they're staying the same, or maybe even getting a little more positive.

HEMMER: Interesting and surprisingly, too. As we go forward Frank, what could change, what could impact consumer confidence in the country?

NEWPORT: Well, it's a very volatile time, Bill. The things that we hear about on CNN, of course the possibility of the attacks in Afghanistan, other terrorist activity within the U.S. Rebound effects if there are in fact, or layoffs. All of those kinds of things could ultimately push the consumer's confidence lower, a lot of dismal looking economists, dismal thinking economists, are saying that may happen, but they're just saying right now, we haven't seen it so far. The consumers are remaining remarkably constant, or actually a little bit more upbeat than we would have anticipated -- Bill.

HEMMER: We shall watch that rebound effect. Frank, thanks.

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