LOS ANGELES (February 6, 2018) — The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, increased in February to its highest level in more than 13 years. The overall Economic Optimism reading rose from 55.1 to 56.7, up 2.9 percent. This marks 17 consecutive months in which the index has remained in positive territory, continuing its streak as the longest stretch in more than a decade.
A reading below 50 indicates pessimism while a reading above 50 signals optimism for the IBD/TIPP indexes. The overall Economic Optimism Index, which began in February 2001, reached its all-time high of 62.9 in March 2002.
In addition to the Economic Optimism Index, IBD/TIPP surveyed respondents on key political issues for the separate Presidential Leadership Index and National Outlook Index, as well as the Financial Related Stress Index (see separate story here for details). The Financial Related Stress Index reflects the lowest degree of personal financial stress since IBD/TIPP began tracking the measure in 2007.
The IBD/TIPP Economic Optimism Index has established a strong track record of foreshadowing the confidence indicators issued later each month by the University of Michigan and The Conference Board. IBD/TIPP conducted its national telephone poll of 900 adults from January 25 to February 2, using live interviewers and both cell phone and landline numbers. The margin of error is +/-3.3 percentage points.
“The overall Economic Optimism Index reached its highest level since October of 2004, while the sub-index for the 6-month outlook stood at its highest since October of 2012,” said Terry Jones, IBD's Commentary Editor. “Clearly, as far as optimism goes, there has been a major positive shift in sentiment, particularly evident since the December passage of Trump’s tax cuts.”
The IBD/TIPP Economic Optimism Index has three key components. This month, two of the three index components increased.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, rose to 57.5, the highest since Oct 2012. At 57.5, the component remains substantially above its 32.1 reading 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 was the only index to drop this month, decreasing by 0.3 percent, from 64.0 to 63.8.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, rebounded this month with a 6.6 percent increase, from 45.7 to 48.7.
“Americans are upbeat because of Trump’s tax cuts, a month-long run-up in the stock market and a strong job market,” noted Raghavan Mayur, president of TechnoMetrica, IBD's polling partner. “Plans by the corporate sector for increased investment and domestic expansion have boosted confidence. The theatrics surrounding the government shutdown had no impact on consumer sentiment.”
This month, 19 of 21 demographic groups -- such as age, income, race and party preference -- that IBD/TIPP tracks were above 50 on the Economic Optimism Index. That’s up from 18 of 21 last month. Fifteen groups improved on the index, while six declined.
On the Economic Outlook component, 19 of the 21 groups that IBD/TIPP tracks scored in optimistic territory. Sixteen groups improved on the component,while five declined.
On the Personal Financial component, all 21 groups IBD/TIPP tracks again scored in optimistic territory. Ten groups increased; nine groups decreased; and two stayed the same.
On the Federal Policies component, eight of the 21 demographic groups tracked were above 50. Nineteen groups advanced on the component, and two declined.
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ABOUT THE IBD©/TIPP POLL
The IBD/TIPP Economic Optimism Index is the earliest take on consumer confidence each month and predicts with good 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 national poll is generally conducted in the first week of the month by live interviewers and both cell phone and landlines.
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