Gallup's economic confidence index this week reached its highest level since mid-February, continuing along a positive trend that started in the week after the death of top terrorist Osama bin Laden earlier this month.


Still, confidence could wane if consumer sentiment is not reinforced by additional positive economic reports, Gallup reported on Tuesday.


Indeed, the U.S. economy is by no means out of the danger zone, and a number of factors could thwart confidence: The U.S. and global economies seem to be slowing, according to a number of economic reports. The Dow Jones Industrial Average has been down for three weeks in a row and jobless claims continue to run above 400,000, suggesting that job growth is insufficient to put a dent in the U.S. unemployment rate.


The battle over raising the U.S. federal debt limit seems to be heating up as U.S. Treasury Secretary Timothy Geithner warns of dire financial consequences if Congress does not act. Moreover, there exists a feeling of deja vu as the European debt situation has surfaced once more, as it did about this time a year ago, Gallup said.


The recent heightening in economic confidence may also be the continuation of a "halo effect" from the bin Laden news, reinforced by a surprisingly quick decline in gas prices. So if this spike in confidence turns out to be transitory, these gains could dissipate quickly in the weeks ahead, according to the renowned survey company.


"POOR" RATINGS CLIMBED IN MAY


Forty-two percent of Americans rated current economic conditions "poor" in the week ending May 22 -- essentially the same as during the prior two weeks, and an improvement over April. Thirty-seven percent of Americans have said the U.S. economy is "getting better" in each of the past three weeks, the highest level since mid-February.


Readings for the weeks ending May 8 and 15 are similar to those of comparable weeks in 2010. While this trend continued in the week ending May 22, 2011, the percentage of poor responses increased in the week ending May 23, 2010, before returning to trend in the following week. As a result, May 2011 trends seem generally consistent with the trend during the same weeks of May 2010, Gallup said.


THIS WEEK'S POSITIVE NEWS BADLY NEEDED


In spite of what happens going forward, the current news is welcome, Gallup said.


"Whatever the sources, improved economic confidence is something the U.S. economy badly needs right now," Gallup said.


Gallup's economic confidence index peaked this year in February and later trended downward through the week ending April 24, when gas prices surged and economic activity slowed.


U.S. economic confidence, however, rebounded the week after the White House announced the death of bin Laden, terrorist mastermind and leader of al-Qaida, the organization behind the 9/11 attacks that killed nearly 3,000 people in New York and Washington.


The increase also coincided with Mother's Day celebrations and what was generally interpreted as a good jobs report may have also helped ramp up confidence, despite a jump in unemployment figures from 8.8 percent in March to 9 percent in April.


The recent decline in oil and gas prices could also bode well for an economy in which the high unemployment rate -- up from 8.8 percent in March to 9 percent in April -- points to a sluggish recovery.


Over the past week, gasoline prices dropped 10 cents -- a modest decline given current gas prices near 4 U.S. dollars per gallon -- but a gain, however small, for consumers.


"Americans expect that gas prices will hit 4.52 U.S. dollars per gallon this year, so any movement in the opposite direction clearly qualifies as positive reinforcement toward improved economic confidence," Gallup said.


Gallup's Economic Confidence Index consists of two measures: one involving Americans' views about whether the U.S. economy is "getting better" or "getting worse," and the second based on Americans' ratings of current economic conditions as "excellent," "good," "only fair," or "poor"。


The improvement in economic confidence found so far in May is apparent in both measures, it noted.


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