LOS ANGELES -- October 8, 2019 -- The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, rose 3.5% to 52.6 in October, reversing two months of decline. The index now remains above 50.0 for a record 37 consecutive months, 34 of which have occurred during the Trump presidency. This is the longest streak in positive territory for any U.S. president since IBD/TIPP began tracking. Under President George W. Bush, the index had two separate 24-month runs above 50.0. An index reading below 50.0 for the IBD/TIPP indexes 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 conducted its national telephone poll of 900 adults from September 26 to October 3, 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.
This month the Presidential Leadership Index increased for the second consecutive month. Its October reading of 44.8 increased 3.2% from September, but it has yet to regain all of the ground lost since July’s 47.2 reading. While President Trump’s Job Approval rating was the index’s only component to decline in September, it rose 7.0% in October to 44.5.
The National Outlook Index reversed its two-month decline in October. This index rose 3.8% to 45.9 from 44.2 in September, with the index’s Morals & Ethics component climbing 13.4% to a reading of 30.5 in October versus 26.9 last month. Additionally, the Financial Related Stress Index reflected slightly less stress than last month. October’s reading of 52.8 decreased from 53.3 in September. A reading below 50.0 on this index indicates that consumers feel less financial stress while a reading above 50.0 equals more financial stress.
“The news out of Washington seems to change by the hour, yet Americans don’t seem overly concerned about how the present impeachment inquiry will affect their own lives,” said Terry Jones, IBD's commentary editor. “People are paying close attention to the inquiry, but with another strong jobs report, Americans continue to feel good about their personal financial outlook.”
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, increased by 1.2%. However, the component remains in negative territory with a reading of 43.5, up from 43.0 last month, which was the lowest reading in three years. Nevertheless,
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, rose by 2.4% in October after dropping by 5.4% in September. It yielded a reading of 60.6 this month, compared to 59.2 last month.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, reversed a two-month slide in October, moving from 50.3 last month to 53.6-- a 6.6% increase.
"Consumer sentiment continues to be strong despite the trade war with China and the stock market under pressure. The job market continues to be good, with the unemployment rate falling to a 50-year low. Nearly one half of respondents think that the economy is improving, and a similar share gives high marks to the President for his handling of the economy -- a factor behind the increase in Trump’s Job Approval rating from 39% in September to 43% this month, despite the impeachment talk,” said Raghavan Mayur, president of TechnoMetrica who directed the poll.
This month, 14 of 21 demographic groups — such as age, income, race and party preference — that IBD/TIPP tracks were at or above 50 on the Economic Optimism Index. That’s the same as in September, but down from 16 in August and 19 in July. Twelve groups rose during the month, up from just three groups in September and five in August. All groups rose in July, following an across-the-board drop in June. In May, all rose.
On the Economic Outlook component, just one of the 21 groups that IBD/TIPP tracks scored in optimistic territory, versus three in September, 11 in August, 13 in July and four in June. In May, 18 were in the optimistic zone. Optimism has downshifted sharply, with only Republicans remaining optimistic.
On the Personal Financial component, all 21 groups IBD/TIPP tracks remained in optimistic territory. That’s up from 19 in September. Twelve groups rose, after just three groups rose in September and seven in August. Significantly, one of those groups was Democrats. Ten groups fell, down from 18 in September and 14 in August. In July, 17 rose and just four fell. In June, three groups rose while 18 declined. The index stood at 60.6 in October, up from 59.2 in September but down from 62.6 in August, 63.1 in July and 61.1 in June. May’s 64.4 was the highest this year, and October’s 66.7 was the highest ever.
On the Federal Policies component, 13 of the 21 demographic groups tracked were above 50, up from 11 in September and 12 in August, but below July’s 16. This month, 15 groups rose, up from just six in September and four in August, but down sharply from 19 in July.
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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