LOS ANGELES -- May 7, 2019 -- The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, rose 8.1 percent in May to reach its highest level since February 2004. The 58.6 reading also ensured that the index continues its record run, remaining in positive territory for 32 consecutive months. An index reading below 50 for the IBD/TIPP indexes indicates pessimism while above 50 signals optimism.
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 April 26 to May 5, 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 and National Outlook indexes rose across every component, and the Financial Related Stress Index continued to improve. The Presidential Leadership Index climbed 5.4 percent to 47.0, its highest reading since March 2017, while the National Outlook Index rose 5.2 percent, going from 46.4 in April to 48.8 in May.
The Financial Related Stress Index reflected that consumers feel lower amounts of financial stress, declining for the third consecutive month and remaining in favorable territory. Stress fell by 3.0 percent, moving from 49.9 last month to 48.4 this month. A reading below 50 on this index indicates that consumers feel less financial stress while a reading above 50 equals more financial stress.
“Despite political gamesmanship and partisan divides, Americans believe the economy is a clear bright spot,” said Terry Jones, IBD's Commentary Editor. “There have been ripples of uncertainty over the past several months, but with May’s Economic Optimism Index hitting a 15-year high, consumers have seemingly moved past their doubts on the issue that directly impacts their pocketbook.”
The flagship IBD/TIPP Economic Optimism Index has three key components. This month, all three increased.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, increased the most of all components. It rose 14.3 percent and returned to positive territory, yielding a reading of 55.8 in May, up from 48.8 in April. It remains substantially above the 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 3.2 percent. Its reading moved from 62.4 last month to 64.4 this month.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, moved up 8.0 percent. The component rose from 51.5 in April to 55.6 in May. That’s the best reading since April 2003.
“With the latest jobs report and unemployment at its lowest rate since 1969, Americans are extremely optimistic about their economic prospects, with our index at its 184-month high,” said Raghavan Mayur, president of TechnoMetrica Market Intelligence, IBD's polling partner. “Sixty percent think that the economy is improving. As a result of the strong economy, Trump is trending up as well. Over one half give the President an A or B grade for his handling of the economy. Indicative of the positive sentiment, Americans also report low financial stress levels.”
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 is up from 14 in April. All 21 groups rose during the month, vs. 13 in April.
On the Economic Outlook component, 18 of the 21 groups that IBD/TIPP tracks scored in optimistic territory, vs. eight in April, 10 in March, and just two in February.
On the Personal Financial component, all 21 groups IBD/TIPP tracks remained in optimistic territory, as 14 groups rose while six declined, and one was unchanged. Notably, the index stood at 64.4 in May, after hitting an all-time high of 66.7 in October.
On the Federal Policies component, 17 of the 21 demographic groups tracked were above 50, up from 11 in April. Eighteen groups rose and three 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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