Americans' views of the near-term U.S. economic outlook remain solidly pessimistic, edging up only slightly from a three-year low, the October IBD/TIPP Poll found. The weak reading came despite an easing of China trade war tensions that fueled last month's stock market gains. But the rally lost steam as weaker economic data last week seemed to confirm that growth has turned sluggish, though the Dow Jones slashed weekly losses in volatile action. The House Democrats' opening of a Trump impeachment inquiry also may have weighed on the outlook.
The gauge of the six-month economic outlook ticked up a half-point to 43.5. Readings below the neutral 50 level reflect pessimism.
The broader IBD/TIPP Economic Optimism Index rose 1.8 points to a modestly optimistic 52.6.
Economic Optimism Index Components
The IBD/TIPP Economic Optimism Index is a composite of three major subindexes. They track views of near-term economic prospects, the outlook for personal finances, and views of how well government economic policies are working.
The six-month outlook gauge for the economy has come down 14 points from the 13-year high of 57.5 in February 2018 that came on the heels of tax cuts. The index registered 32.1 in December 2007 as the economy entered recession.
The personal finances subindex rose 1.4 points to 60.6, strongly optimistic. The index launched in 2001 hit a record 66.7 in October 2018 before financial markets hit turbulence late last year.
The federal policies subindex rose 3.3 points to 53.6. The 55.6 reading in May — just before Trump blew up the first China trade war cease-fire — was the highest since April 2003.
Noninvestors Lose Confidence, Republicans Less Bullish
Among noninvestors, the six-month economic outlook index slumped to 37.1, the lowest since December 2011. That compares to a 46.1 reading for investors.
Meanwhile Republican optimism waned, with the 6-month economic outlook falling to 67.5, the lowest since Trump's election in November 2016. The drop could be a side-effect from the Trump impeachment effort or just a reflection of softer growth.
Meanwhile, Democrats and independents were less pessimistic about the future. In the overall IBD/TIPP Economic Optimism Index, the reading for independents climbed 2.7% to 52.1, signaling modest optimism.
The October IBD/TIPP Poll showed 48% of Americans approved of Trump's handling of the economy, up from 46% the prior month. The improvement came amid renewed Chinese purchases of U.S. agricultural goods ahead of this week's trade talks. Still, just 39% backed Trump's China trade policy, unchanged from September, while 48% disapproved.
However, several negative China trade headlines are dimming hopes for positive talks this week, with the Dow Jones and other indexes retreating so far this week.
The IBD/TIPP Poll reflects responses from 900 adults contacted via mobile phones and landlines from Sept. 26 to Oct. 3. It carries a 3.3-point margin of error.
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