The IBD/TIPP Economic Optimism Index rose in December to its strongest level since May as the Dow Jones and broader stock market rally hit fresh highs on a finalized first-phase China trade deal. Americans' economic outlook turned positive for the first time in five months.
The overall IBD/TIPP Economic Optimism Index climbed 4.9 points, or 7.8%, to 57, the third straight monthly increase. Readings above the neutral 50 level reflect optimism.
Among self-described investors, the reading spiked 8.8 points to 59.4 after falling in November to its weakest reading since September 2016. Among non-investors, economic optimism fell to 53.3 from November's 57.4, but above October's gloomy 48.7.
Economic Optimism Index Components
The IBD/TIPP Economic Optimism Index is a composite of three major subindexes. They track views of near-term prospects for the U.S. economy, the outlook for personal finances, and views of how well government economic policies are working.
The Six-Month Economic Optimism Index spiked 6 points, or 12.8%, to 53.6, ending three straight sub-50 readings and a neutral August finding.
The personal finances subindex climbed 1.4 points, or 2.3%, to 63.1.
The federal policies subindex leapt 9.8% to 55, the best since a matching July reading.
Americans More Bullish On Trump
The December IBD/TIPP Poll showed 50% of Americans approved of President Donald Trump's handling of the economy vs. 44% in November and 48% in October. Just 32% disapproved. Among independents, the split was 49%-32%. Among investors, it's 52%-30% vs. 42%-42% last month.
Over the past month, the Dow Jones Industrial Average has surged while U.S. jobs growth was much stronger than expected. Also, Elizabeth Warren's and Bernie Sanders' plans for a wealth tax and "Medicare for All" have come under fire, including from rival Democratic candidates and top Democratic investors.
China Trade Deal Lifts Dow Jones, Trump Ratings
Just 41% thought Trump was doing a good job of handling China trade, vs. 43% who did not. But that's a big improvement from November, when 37% approved of his China trade performance vs. 49% who did not. A plurality of independents are now upbeat on China trade, 41%-40%, vs. November's dismal 32%-50%.
Last week's China trade deal likely drove Trump's improved ratings on that issue. Buzz for a phase-one China trade deal picked up early last week, with several reports on Thursday saying a final agreement was ready to go, pushing the Dow Jones and other indexes to record highs. Trump made the actual announcement on Friday. IBD/TIPP polling ended on Saturday.
The China trade deal scrapped planned China tariffs for Dec. 15. Instead, the U.S. and China will roll back some existing tariffs. The initial China trade deal still must be signed and implemented, with thornier issues left for phase-two talks. But the new accord should remove a big weight on the U.S. and global economy.
The IBD/TIPP Poll reflects responses from 905 adults contacted via mobile phones and landlines from Dec. 5-14 and carries a 3.3-point margin of error.
Please click here to read the original article on the Investor's Business Daily website.