LOS ANGELES (August 10, 2010) — The IBD/TIPP Economic Optimism Index decreased 1.1 points, or 2.5%, in August posting 43.6 vs. 44.7 in July. This month's reading puts the index at its 12-month low. The index is 3.8 points below its 12-month average of 47.4 and 0.8 points below its reading of 44.4 in December 2007 when the economy entered into the recession, and 7.2 points below its all-time average of 50.8.
Note: Index readings above 50 indicate optimism; below 50 indicate pessimism.
The IBD/TIPP Economic Optimism Index has a good track record of foreshadowing the confidence indicators put out later each month by the University of Michigan and The Conference Board. IBD/TIPP conducted the national poll of 837 adults from August 2 to August 8. The margin of error is +/-3.5 percentage points.
The IBD/TIPP Economic Optimism Index has three key components, two of which declined in August.
• The Six-Month Economic Outlook, a measure of how consumers feel about the economy's prospects in the next six months, improved 2.3 points, or 5.4%, to 45.1. When compared to December 2007, the index shows a gain of 13.0 points.
• The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, declined 1.7 points, or 3.3%, to reach 49.2.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, declined 3.9 points, or 9.6%, to reach 36.6.
"The erosion of public's confidence in government's economic policies is behind the decline in optimism this month." said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner.
"The failure of government programs to bring about a promised turnaround in the job market seems to have soured many Americans on current stimulus and bailout efforts," added Terry Jones, associate editor of Investor's Business Daily.
This month, only two of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. The highest index scores were for Democrats (58.1) and Black/Hispanic Americans (54.4).
Fifteen groups declined on the index, six groups advanced and one remained unchanged.
On the Economic Outlook component, three of the groups IBD/TIPP tracks scored in optimistic territory. The highest index scores were for 18 to 24 year olds (52.3), Democrats (63.5), and Black/Hispanic Americans (58.8).
On the Personal Financial component, five of the groups IBD/TIPP tracks scored in optimistic territory. The current reading of 49.2 is twelve month low for the component. Four groups advanced on the index while seventeen groups declined.
On the Federal Policies component, only one of the 21 demographic groups tracked was above 50. The current month reading of 36.6 is the component's one year low. Four groups advanced on the index, while seventeen groups declined.
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ABOUT THE IBD/TIPP POLL
The IBD/TIPP Economic Optimism Index is the earliest take on consumer confidence each month and predicts with 80% 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 poll is generally conducted in the first week of the month.
An analysis of Final Certified Results of Election 04 and Election 08 show that TIPP was the most accurate pollster of both campaign seasons. For more information, go to www.tipponline.com
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