LOS ANGELES -- July 3, 2018 -- The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, rose another 4.6 percent to 56.4 in July, continuing its record run. The index has now spent 22 consecutive months in positive territory, remaining above 50 since October 2016. An index reading below 50 indicates pessimism while above 50 signals optimism for the IBD/TIPP indexes.
The IBD/TIPP Economic Optimism Index has established a strong track record of foreshadowing the confidence indicators issued later each month by the University of Michigan and The Conference Board. IBD/TIPP conducted its national telephone poll of 900 adults from June 21-June 29, using live interviewers and both cell phone and landline numbers. The margin of error is +/-3.3 percentage points.
In addition to the Economic Optimism Index, IBD/TIPP surveyed respondents on key political issues for the separate Presidential Leadership Index and National Outlook Index, as well as the Financial Related Stress Index.
The Presidential Leadership Index rose across all measures to yield an overall reading of 44.3, which is up 7.8 percent from last month’s reading of 41.1. Notably, the individual Leadership component is at its highest point (47.2) since February 2017, shortly after President Trump took office, while the Favorability (42.6) and Job Approval (43.2) components are at their highest levels since March 2017. The National Outlook Index rose 1.7 percent to 46.7, despite modest declines on the Quality of Life, Standing in the World, and Direction of the Country components. Additionally, the Financial Related Stress Index rose slightly to 51.6, a 1.0 percent increase (a higher stress index indicates more stress).
“Despite concern over a potential trade war, the majority of poll respondents support tariffs levied by the President and believe that the U.S. has been taken advantage of on trade,” said Terry Jones, IBD's Commentary Editor. “Worries about a trade war have not yet translated into a decrease in economic optimism, as this measure remains quite high. People also feel like their personal financial outlook is strong with the very low unemployment rate. Responses show that Americans believe Trump’s leadership is particularly strong when it comes to the economy, which has performed well throughout his presidency.”
The flagship IBD/TIPP Economic Optimism Index has three key components. This month, all three components increased.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, rose 4.3 percent to 53.4 in July, remaining in positive territory for the third consecutive month. This is substantially above its 32.1 reading when the economy entered the last recession in December 2007.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, increased by 1.1 percent from 62.1 to 62.8.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, was the biggest mover, rising 9.5 percent to 52.9 and returning to positive territory for the first time since March 2018. July’s 52.9 reading is also the highest mark for this component since December 2006.
This month, 19 of 21 demographic groups -- such as age, income, race and party preference -- that IBD/TIPP tracks were above 50 on the Economic Optimism Index. That compares to 14 of 21 last month. Fifteen groups improved on the index, while six fell. Last month, 10 groups improved on the index, while 11 declined.
On the Economic Outlook component, 16 of the 21 groups that IBD/TIPP tracks scored in optimistic territory. In the previous month, just 11 groups were optimistic.
On the Personal Financial component, once again all 21 groups IBD/TIPP tracks remained in optimistic territory, as 12 groups increased and nine declined.
On the Federal Policies component, 12 of the 21 demographic groups tracked were above 50. Nineteen groups rose, while two fell.
ABOUT THE IBD©/TIPP POLL
The IBD/TIPP Economic Optimism Index is the earliest take on consumer confidence each month and predicts with good reliability monthly changes in sentiment in well-known polls by The Conference Board and the University of Michigan. The IBD/TIPP Economic Optimism Index is based on a survey of 900-plus adults chosen at random nationwide. The national poll is generally conducted in the first week of the month by live interviewers and both cell phone and landlines.
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