The IBD/TIPP Economic Optimism Index gained 0.8 points, or 1.4%, in February, posting a reading of 56.4 vs. 55.6 in January 2017. The index is 6.4 points above its 12-month average of 50.0, 12.0 points above its reading of 44.4 in December 2007 when the economy entered the last recession, and 7.3 points above 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 885 adults from January 27 to February 2 using live interviewers and both cell phone and landlines. The margin of error is +/-3.3 percentage points.
The IBD/TIPP Economic Optimism Index has three key components. This month, two of the index components improved.
• The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, declined 0.4 points, or 0.7%, to 55.6. 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 gained 0.5 points, or 0.8%, to 62.8.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, climbed 2.4 points, or 4.9%, to 50.9.
“Americans are hopeful that President Donald Trump will deliver on his promises to boost U.S. employment and grow the economy,” said Raghavan Mayur, president of TechnoMetrica, IBD's polling partner. “The stock market is in an uptrend with the Dow Jones Index closing above 20,000 for the first time and so also the U.S. created 227,000 jobs in January, vs. 175,000 jobs expected. These encouraging signs are why many Americans see a bright future for the U.S. economy under Trump.”
This month, 19 of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. Ten groups improved on the index, while nine declined. Two did not change.
On the Economic Outlook component, 18 of the 21 groups that IBD/TIPP tracks scored in optimistic territory. Ten groups improved on the component.
On the Personal Financial component, 20 groups IBD/TIPP tracks scored in optimistic territory. Thirteen groups increased, while six declined.
On the Federal Policies component, 13 of the 21 demographic groups tracked were above 50. Fourteen groups advanced on the component and seven declined.