LOS ANGELES (September 13, 2011) — The IBD/TIPP Economic Optimism Index improved by 4.1 points, or 11.5%, in September posting 39.9 vs. 35.8 in August. Last month, the index had crashed to its historic low of 35.8. The index is 4.3 points below its 12-month average of 44.2 and 4.5 points below its reading of 44.4 in December 2007 when the economy entered into the recession, and 10.3 points below its all-time average of 50.2.
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 828 adults from September 6 to September 11. The margin of error is +/-3.5 percentage points.
The IBD/TIPP Economic Optimism Index has three key components, all of which improved in September.
• The Six-Month Economic Outlook, a measure of how consumers feel about the economy's prospects in the next six months, increased 5.2 points, or 16.4%, to 36.9. The sub-index was 32.1 when the economy entered the last recession in December 2007.
• The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, improved 4.8 points, or 10.3%, to reach 51.6.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working gained 2.5 points, or 8.7%, to reach 31.3.
"Consumer confidence is still in a vulnerable territory, despite some improvement in September. A strong improvement in the job market is critical to boosting confidence," said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner.
"Though improved, one month's increase does not a recovery make," said Terry Jones, associate editor of Investor's Business Daily. "The number of jobs in the U.S. is still roughly 6.9 million jobs below the peak of nearly four years ago. Americans' optimism will really be back only when they are convinced that government policies will let private businesses expand again, creating jobs and raising incomes."
This month, three of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. Twenty groups increased on the index.
On the Economic Outlook component, two of the 21 groups that IBD/TIPP tracks scored in optimistic territory. All 21 groups improved in September.
On the Personal Financial component, thirteen of the groups IBD/TIPP tracks scored in optimistic territory. Two groups declined on the component and nineteen improved.
On the Federal Policies component, all of the 21 demographic groups tracked were below 50. Eighteen groups declined on the component, two advanced and one did not change.
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. For more information, go to www.tipponline.com
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