The IBD/TIPP Economic Optimism Index edged up 0.5 points, or 1.1%, in February, posting a reading of 47.8 vs. 47.3 in January. The index is 0.3 points above its 12-month average of 47.5, 3.4 points above its reading of 44.4 in December 2007 when the economy entered the last recession, and 1.3 points below its all-time average of 49.1.
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 telephone poll of 914 adults from January 22 to January 27 using live interviewers and both cell phone and landlines. The margin of error is +/-3.2 percentage points.
The IBD/TIPP Economic Optimism Index has three key components. This month, two of the index components declined.
• The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, decreased 0.4 points, or 0.9%, to 42.5. 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, declined 0.2 points, or 0.3%, to 58.0.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, gained 2.1 points, or 5.2%, to 42.8.
“Low gasoline prices are helping to maintain confidence. Recent stock market volatility has not shaken consumer confidence. Consumers have a mixed opinion of the broader economy -- 49% think the economy is not improving and 47% think it is improving. While 56% say that we are not in a recession, 40% believe we are in one,” said Raghavan Mayur, president of TechnoMetrica, IBD's polling partner.
This month, five of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. Nine groups improved and 11 declined. One did not change.
On the Economic Outlook component, three of the 21 groups that IBD/TIPP tracks scored in optimistic territory. Seven groups improved and 12 declined. Two did not change.
On the Personal Financial component, 20 of the 21 groups IBD/TIPP tracks scored in optimistic territory. Nine groups increased and twelve declined.
On the Federal Policies component, two of the 21 demographic groups tracked were above 50. Seventeen groups advanced on the component and four declined.
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