2008 record      

 

The IBD/TIPP Economic Optimism Index climbed 1.6 points to 56.7 in February, riding a wave of tax-cut-fueled pay hikes, bonuses and stock-market gains to a 13-year high.

The polling from Jan. 25 to Feb. 2, reflecting 900 responses, was conducted as President Trump delivered an upbeat economic message at his State of the Union Address. That followed a six-week period in which hundreds of companies announced one-time bonuses and dozens handed out pay raises, giving credit to the tax legislation. Among those hiking pay in January were Walmart (WMT), which raised its starting wage from $9 an hour to $11, and JPMorgan Chase (JPM), which boosted pay for 22,000 tellers and customer-service agents from a range of $12-$16.50 an hour to $15-$18.

The Economic Optimism Index is now in solidly optimistic territory (readings of 50 are neutral) and at its highest point since October 2004.

All income groups exhibited optimism, though higher earners ($50,000 and up) were relatively more optimistic than those below that threshold, with readings above 58 and below 54, respectively. Rural residents, at 65.8, were more optimistic than at any time in more than a decade, vs. 54.5 for suburbanites and 51.5 for city dwellers. The disparity likely reflects political persuasion to no small extent. Optimism also was at its highest in more than a decade for investors, at 59.5.

The Economic Optimism Index is a composite of three major subindexes that track views of near-term economic prospects, the outlook for personal finances over the coming six months, and views of how well government economic policies are working.

The gauge of the six-month economic outlook gained 2 points to 57.5, its highest level since October 2012.

The six-month personal financial outlook index dipped 0.2 point to 63.8, easing from January's 14-year high.

The final day of polling came as the Dow Jones industrial average dived 666 points on Feb. 2, capping the worst week for the Dow industrials, S&P 500 index and Nasdaq composite in two years. The Dow lost 4.6% and the S&P 500 index 4.1% in Monday's stock market trading, their worst one-day percentage loss since August 2011. Stocks open sharply lower Tuesday but quickly reversed high. If the stock market slide is short-lived then the impact on the economy and economic optimism will be negligible.

Meanwhile, the measure of confidence in federal economic policies jumped 3 points to 48.7. While Americans, as a whole, are still modestly pessimistic about government policies, Republicans, at 80.6, are more positive about economic policy than at any time in the history of the IBD/TIPP Economic Optimism Index, dating back to early 2001.

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