2008 record      


LOS ANGELES (October 12, 2010) - The IBD/TIPP Economic Optimism Index increased 1.1 points, or 2.4%, in October posting 46.4 vs. 45.3 in September. The index is 0.2 points below its 12-month average of 46.6 and 2.0 points above its reading of 44.4 in December 2007 when the economy entered into the recession, and 4.3 points below its all-time average of 50.7.

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 922 adults from October 4 to October 9. The margin of error is +/-3.3 percentage points.

The IBD/TIPP Economic Optimism Index has three key components, two of which improved in October.

  • The Six-Month Economic Outlook, a measure of how consumers feel about the economy's prospects in the next six months, jumped 5.4 points, or 12.2%, to 49.6. When compared to December 2007, the index shows a gain of 17.5 points.
  • The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, improved 0.3 points, or 0.6%, to reach 53.1.
  • Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, declined 2.3 points, or 5.9%, to reach 36.5.

"Consumers are sensing an imminent change in the control of Congress and are also hoping that the message they send in November would have a positive impact on the economy, especially job creation and deficit reduction. The stock market is also helping to boost confidence. Over two-thirds of our polling data was collected prior to Friday's jobs report," said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner.

"Our data clearly show that, while disappointed with federal policies, Americans are looking forward to change in 2011 that will result in material improvement in their finances and in the economy," said Terry Jones, associate editor of Investor's Business Daily. "That could spell big trouble for incumbents on election night."

The Breakdown

This month, only three of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. The highest index scores were for Black/Hispanic Americans (59.0) and Democrats (60.0). The reading for Republicans was 35.3 and Independents was 42.6. Republicans showed a gain of 6.3 points and Independents dropped 0.9 points.

Fourteen groups advanced on the index, seven groups declined.

On the Economic Outlook component, ten of the groups IBD/TIPP tracks scored in optimistic territory. The highest index scores were for Democrats (64.0), and Black/Hispanic Americans (64.0).

On the Personal Financial component, eighteen of the groups IBD/TIPP tracks scored in optimistic territory. Ten groups advanced on the index while ten groups declined.

On the Federal Policies component, only one of the 21 demographic groups tracked were above 50. The index improved from its twelve month low of 36.6 in August to 38.8 in September only to slide back to 36.5 in October. Six groups advanced on the index, while twelve groups declined and three did not post any change.

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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

Investor's Business Daily is a leading financial news and research organization recognized for proprietary stock screens, comparative performance ratings and a record of identifying stock leaders as they emerge. IBD's companion website, Investors.com, offers stock tools and research for investors of every level. These include the IBD Learning Center, intraday reports on market action and the IBD StockCheckup®. IBD hosts popular investment workshops and provides Home Study programs based on The CAN SLIM® Investing System. The newspaper was founded April 9, 1984 by William J. O'Neil, who originated the investing system that has outperformed major market indexes* for years.

*The American Association of Individual Investors' independent "real time" study found IBD's CAN SLIM investing achieved a 1519.8% gain vs. 54.9% for the S&P 500 the past nine-and-one-half years (1998 through June 2007, AAII Stock Screen).

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