Bank confidence is on the rise and consumer confidence in the United States banking system is now at its highest level in five years, according to a recent Gallup poll.
Gallup polled a random sample of 1,529 American adults in early June, asking them to describe their attitudes and feelings about banks. The number of respondents expressing some level of confidence currently stands at 26 percent, up from a record low of 21 percent one year ago.
This news comes on the heels of a positive report from the “Financial Accounts for the United States” report released in June by the Federal Reserve Bank of St. Louis. The report notes that households nationwide regained 114.3 percent of total household wealth lost during the recession.
When the figures were adjusted for inflation, the net gain was the second-largest ever. Most of the gains came from stock holdings and rising home prices, which increased the wealth of some families.
Another positive sign of growth comes from the Thomson Reuters/University of Michigan’s Consumer Sentiment Index. In May 2013, this index rose to 83.7, up from 76.4 in April. This index measures optimism or pessimism toward the economy and analyzes consumer spending trends. As consumer sentiment rises, optimism in the country’s economic future rises as well.
Historically, confidence in the banking system falls in tandem with economic woes. Similar poll results were seen after the recession in the early 1980s, and the savings and loan crisis of the late 1980s and early 1990s also caused a dip in confidence. Behavioral economics suggests that the worse the financial crisis, the longer it will take for bank confidence to rebound. Thus, a positive trend such as the one noted in the June 2013 Gallup poll is a good sign of economic health.
Improved faith in banks, gains in overall household wealth and rising consumer sentiment indicate a recession rebound. As Gallup states on its website, “A strong banking system, including strong public confidence, is essential if the U.S. economy is going to achieve strong, sustainable economic growth.”
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