The IBD/TIPP Economic Optimism Index gained 2.2 points, or 4.5% in April, posting a reading of 51.3 vs. 49.1 in March. The index is 3.9 points above its 12-month average of 47.4, 6.9 points above its reading of 44.4 in December 2007 when the economy entered the recession, and 2.1 points above its all-time average of 49.2.
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 900 adults from March 26 to April 1. The margin of error is +/-3.4 percentage points.
The IBD/TIPP Economic Optimism Index has three key components. This month, two of the three components improved.
• The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, increased 4.6 points, or 9.8%, to 51.5. 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, decreased 1.5 points, or 2.6%, to 56.7.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, increased 3.4 points, or 8.0%, to 45.7.
“Gasoline prices are relatively lower as compared to last year. People have more money to spend or save. More than one-half believe that the economy is improving and 52% feel we are not in a recession,” said Raghavan Mayur, president of TechnoMetrica, IBD's polling partner.
“This rebound in the index may in part be related to the easing of brutal winter conditions across much of the country,” said Terry Jones, associate editor of Investor’s Business Daily. “Significantly, the results do not include a spate of bad economic news that came after the poll closed, including a subpar jobs report suggesting slowing economic growth.”
This month, 14 of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. Fifteen groups improved, five declined and one did not change.
On the Economic Outlook component, 13 of the 21 groups that IBD/TIPP tracks scored in optimistic territory. Seventeen groups improved and four declined.
On the Personal Financial component, 20 of the 21 groups IBD/TIPP tracks scored in optimistic territory. Seven groups increased, 14 declined.
On the Federal Policies component, three of the 21 demographic groups tracked were above 50. Eighteen groups advanced on the component and three declined.