LOS ANGELES, April 3, 2018 -- The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, has entered its 19th consecutive month in positive territory. This is the longest stretch in more than a decade. It is also the second month in which the index has fallen, decreasing 5.4 percent from 55.6 to 52.6. An index reading below 50 indicates pessimism while a reading above 50 signals optimism for the IBD/TIPP indexes.
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 902 adults from March 22 - March 29, using live interviewers and both cell phone and landline numbers. The margin of error is +/-3.3 percentage points.
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 Presidential Leadership index rose by 3.3 percent to 41.2 while the National Outlook index dropped 1.8 percent to 44.3. The Financial Related Stress Index increased to 52.6, which reflects the highest degree of personal financial stress since December 2017.
“We continue to see fluctuations each month across the indexes, but have stayed in positive economic territory overall, despite a few wild days in the market,” said Terry Jones, IBD's Commentary Editor. “These blips echo the instability of the current political climate, particularly around trade policy and tariffs. Yet, because the economy continues to perform well and unemployment rates are low, the month-to-month changes in the indexes have remained blips.”
The flagship IBD/TIPP Economic Optimism Index has three key components. This month, all three components decreased.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, dropped another 6.0 percent from last month’s 52.9 reading. The April reading of 49.7 takes the component into negative territory for the first time since December 2017. Nevertheless, this 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, decreased 4.9 percent, from 63.8 to 60.7.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, returned to negative territory after a one month respite. It fell from March’s reading of 50.0 to 47.4 -- a 5.2 percent drop.
“While the strong job market lifts consumer sentiment, fears of trade wars work to depress it. We expect consumer sentiment to moderate slightly in the coming months as the stock market works through its current correction,” noted Raghavan Mayur, president of TechnoMetrica, IBD's polling partner. “On a longer horizon, the special counsel’s investigation is an existential threat and poses uncertainty to the Trump presidency, and thereby the economy, even though most think that no charges will be filed against Trump.”
This month, 17 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 down from 19 last month. Just two groups improved on the index, while 19 declined. In March, six groups improved, and 15 declined.
On the Economic Outlook component, 12 of the 21 groups that IBD/TIPP tracks scored in optimistic territory. In March, 15 of 21 groups were optimistic.
On the Personal Financial component, once again all 21 groups IBD/TIPP tracks remained in optimistic territory, but just three groups increased while 18 declined.
On the Federal Policies component, five of the 21 demographic groups tracked were above 50. Nineteen groups fell on the component, while just two rose.
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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