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Economic Optimism Dips, Remains in Negative Territory for Sixth Consecutive Month, According to Latest IBD/TIPP Poll

LOS ANGELES -- September 8, 2020 -- The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, fell 3.8% in September, moving from 46.8 last month to 45.0 this month. This marks the index’s sixth straight month in negative territory. For the IBD/TIPP indexes, a reading below 50.0 indicates pessimism.
 
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 surveyed 1,197 adults, including 1,033 registered voters, from August 29 to September 1. Due to COVID-19, the poll was conducted online using TechnoMetrica’s network of online panels to provide the sample.
 
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.
 
This month, the Presidential Leadership Index fell by 9.4%, going from 42.6 in August to 38.6 in September, its lowest point since December 2017. All three components on the index declined, with the Favorability category dropping 10.4%, decreasing from 43.1 to 38.6.
 
The National Outlook Index fell across five of six components, with two of the six components decreasing by double digits. The index’s September reading of 38.4 reversed last month’s rise. This month, the index is down 5.7% overall from last month’s mark of 40.7. The Morals and Ethics component dropped the most, falling 14.9% from 29.5 to 25.1, while Direction of the Country declined 12.8%, moving from 35.2 last month to 30.7 this month. Standing in the World was the only index component to rise. It was up 3.9%, moving from 38.1 in August to 39.6 in September.
 
September’s Financial Related Stress Index was a bright spot, improving for the fifth consecutive month. There was a 2.9% decline in stress. The index moved from 62.9 to 61.1 this month. However, the reading keeps the index above 50. A reading over 50.0 equals more financial stress while a reading below 50.0 on this index would indicate consumers feel less stress. This index has been above 50 since March.
 
“Last month’s gains largely disappeared in September amid the ongoing pandemic,” said Ed Carson, IBD's news editor. “Despite the strong performance of the stock market, confidence in Federal Economic Policies dropped by double digits, taking us to the lowest point in four years. People continue to be worried about their financial security, particularly as stimulus talks drag on.” 
 
 The flagship IBD/TIPP Economic Optimism Index has three key components. This month, just one of the three indexes increased.
 

  • The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, rose by 4.3%, from 39.8 in August to 41.5 this month.

  • The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, declined by 3.0%. The component moved from 53.3 last month to 51.7 in September.

  • Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, fell by 11.7% moving from 47.2 in August to 41.7 in September. This marks its lowest point since September 2016.
     

“Consumer confidence eased in September, as Americans grappled with the loss of generous extended unemployment benefits from the federal government, which had cushioned consumer wallets amid sky-high unemployment,” said Raghavan Mayur, president of TechnoMetrica, who directed the poll. “Despite the increased pessimism about the U.S. economy, Americans are more hopeful about their job situations, as the labor market continues on its road to recovery from coronavirus lockdowns. This month, one-third (33 percent) of Americans surveyed reported being very or somewhat concerned that they or someone in their household would be laid off within the next 12 months, a seven-point drop from 40 percent in August. The boost in Americans’ sense of job security comes as the share of job-seeking households plummets. A little more than one in three (34 percent) U.S. households have at least one member who is currently unemployed and looking for a job, down from a share of 40 percent last month. Thus, as more Americans head back to work and regain a regular income, consumer spending may pick up in the near future.”


Economic Optimism Index Breakdown

This month, three of 21 demographic groups — such as age, income, race and party preference — that IBD/TIPP tracks are above 50, in positive territory, on the Economic Optimism Index. That’s vs. four in August, two in July, four in June, nine in May, six in April, 15 in March, 19 in February and 20 in January. Just seven groups rose this month vs. 17 in August and two in July and June. In May and April, 17 fell while all 21 groups retreated in March. Sixteen rose in February and 11 in January.

On the Six-Month Economic Outlook component, just one of 21 groups that IBD/TIPP tracks scored in optimistic territory, the same as in August and July. Just two were upbeat in June, three in May, one in April, seven in March, 14 in February and 12 in January. Optimism over the economy’s six-month outlook rose among Republicans, independents, Democrats and investors. Optimism among Independents, a key swing vote in upcoming elections, rose to a still-low 34.1 after hitting a 12-year low of 27.2 in August. The reading was 29.3 in July and 38.6 in June. It was 42.7 in March and 57.5 in February.
 
On the Personal Financial component, 13 groups IBD/TIPP tracked were in optimistic territory, vs. 15 in August, 11 in July, 10 in June, 13 in May and all 21 in March, February and January. Five groups improved after 15 did in August, 12 in July, four in June and 15 in May. All 21 groups fell in April and 17 in March.
 
On the Federal Policies component, just two of the 21 demographic groups tracked were above 50 vs. eight in August and only one in July. Eight were above 50 in June, 17 in May and 19 in April. Eighteen groups rose in August and none did in July or June. Six groups rose in May, 17 in April and just one in March.
 
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. The national poll is generally conducted in the first week of the month by live interviewers and both cell phone and landlines.
 
For more information, go to www.tipponline.com. To license the IBD/TIPP Poll, please contact: IBDlicensing@investors.com.
 
About IBD

Investor's Business Daily (IBD) is a leading financial news and research organization recognized for proprietary stock screens, comparative performance ratings and a record of identifying stock leaders as they emerge. The company takes a data-first approach to investing, educating investors about how to invest successfully using tested methods and sound research. IBD has honed its approach over the last 50 years to help investors make smarter decisions. Its stock lists have outperformed the S&P, and its presidential poll, the most accurate over the past four election cycles, was one of only two national polls to accurately predict the outcome of the 2016 Presidential Election. IBD offers a number of interactive stock research tools and provides information for investors of every level. To learn more about all that IBD has available, please visit www.investors.com.
 
© 2020 Investor's Business Daily, Inc. All rights reserved. Investor's Business Daily, IBD, CAN SLIM and their corresponding logos are registered trademarks of Investor's Business Daily, Inc. 

For Editorial Contact:

Marisa Lam
GMK Communications for IBD
marisa@gmkcommunications.com
650.544.3350

 



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