LOS ANGELES (December 7, 2010) — The IBD/TIPP Economic Optimism Index declined 0.9 points, or 1.9%, in December posting 45.8 vs. 46.7 in November. The index is 0.6 points below its 12-month average of 46.4 and 1.4 points above its reading of 44.4 in December 2007 when the economy entered into the recession, and 4.9 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 894 adults from November 29 to December 4. The margin of error is +/-3.3 percentage points.
The IBD/TIPP Economic Optimism Index has three key components, two of which improved in November.
• The Six-Month Economic Outlook, a measure of how consumers feel about the economy's prospects in the next six months, fell 1.3 points, or 2.6%, to 48.7. When compared to December 2007, the index shows a gain of 16.6 points.
• The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, improved 0.1 points, or 0.2%, to reach 52.0.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, fell 1.5 points, or 3.9%, to reach 36.8.
"Consumer confidence is still wobbly. The soft job market and the debate on the extension of unemployment benefits and Bush tax cuts are contributing to the slide in confidence," said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner.
"There is a tremendous amount of uncertainty right now over Washington's tax and spending policies," said Terry Jones, associate editor of Investor's Business Daily. "In particular, many Americans fear they could be hit with a major tax hike in January, as the Bush tax cuts expire and new, higher rates kick in. This has held back business investment and job creation, and is dampening the optimism of American consumers."
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 Democrats (59.8) and Black/Hispanic Americans (54.4). The reading for Republicans was 34.8 and Independents was 43.2. Republicans showed a loss of 4.2 points and Independents gained 2.0 points.
Eight groups advanced on the index, thirteen 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 (63.1), and Black/Hispanic Americans (59.4).
On the Personal Financial component, sixteen of the groups IBD/TIPP tracks scored in optimistic territory. Twelve groups advanced on the index while nine groups declined.
On the Federal Policies component, only one of the 21 demographic groups tracked was above 50. The only group was Democrats at 56.8. The index shed 1.5 points in December. Seven groups advanced on the index, while twelve groups declined and one did not change.
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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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