Broad-based gains in consumer confidence continued in September, with the IBD/TIPP Economic Optimism Index reaching a 30-month high. But the improvement is not rubbing off on the grades President Obama gets on handling the economy.
The Economic Optimism Index rose 2.2 points, or 4.4%, this month, registering 52.5 vs. 50.3 in August. Index scores above 50 indicate optimism, below 50 indicate pessimism.
This month's reading puts the index 5 points above its 12-month average of 47.5 and 8.1 points above its reading of 44.4 in December 2007, when the recession began. It's now 1.3 points above its all-time average of 51.2.
IBD/TIPP conducted the latest poll of 924 Americans last week between Sept. 8 and 13.
Consumer spending accounts for 70% of the economy. If healthy confidence can be sustained, it could help boost consumer spending.
The IBD/TIPP Economic Optimism Index has three key components, all of which rose in September.
- The Six-Month Economic Outlook, a measure of how consumers feel about the prospects in the next six months, increased 1.2 points, or 2.3%, to reach 53.7. When compared with December 2007, the index shows a gain of 21.6 points.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, moved up 2.9 points, or 5.4%, to reach 57.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of opinions on how government economic policies are working, rose 2.3 points, or 5.2%, to reach 46.6.
In the IBD/TIPP Presidential Leadership Index, a composite measure of the president's favorability, approval and leadership, President Obama dipped to 57.0 this month from 57.6 in August.
Despite his popularity, a majority of Americans (58%) give the president a C grade or below for his handling of the economy. Only 41% give him an A or B. Overall, he gets a C grade. Democrats give him a B-, Republicans a D and Independents a C.
Despite healthy consumer confidence, the job market still looks bleak. The nation's unemployment rate rose to 9.7% in August, reflecting a loss of 7.4 million jobs since the start of the recession.
On Tuesday, Fed Chairman Ben Bernanke said the worst recession since the 1930s is probably over and the anticipated growth won't be sufficient to prevent the unemployment rate from rising.
One reason why the president gets poor grades on handling of the economy is his inability to make a dent on the jobs front. Health care has dominated his focus in recent months, relegating the economy to the back seat, though he has tried to link the two.
The president's Council of Economic Advisers reported last week that the recently passed stimulus created or saved 1 million jobs. Even if that's accurate, the impact is only modest compared with the 3 million jobs shed since the passing of the stimulus.
The president also gets poor grades for his management of the federal budget. Overall, he gets a C-, with Democrats giving him a B-, Republicans a D, and Independents a C-.
The deficit for the fiscal year ending Sept. 30 is running at $1.378 trillion, compared with $458 billion, the previous high of 2008. The accumulated national debt is close to $12 trillion.
Mayur is president of TechnoMetrica Market Intelligence, which directs the IBD/TIPP Poll, which was the most accurate in the last two presidential elections.