The IBD/TIPP Economic Optimism Index fell 3 points to 52.6 in April, continuing to fade after hitting a 13-year high of 56.7 in February.
The six-month economic outlook, one of three IBD/TIPP Economic Optimism Index subgauges, slid to 49.7. That's just below the 50 neutral level. In February, the outlook gauge hit 57.5, the highest since October 2012, as economic optimism rode a wave of tax cuts, bonuses and wage hikes.
The March 22-29 survey of 902 people came after President Trump stirred fears of a trade war with China. The Dow Jones tumbled more than 1,100 points in the first two days of polling, as Trump announced plans to hit China with 25% tariffs on up to $60 billion in high-tech imports. Trump also announced steel and aluminum tariffs, but has since has granted temporary exemptions covering more than half of imports.
With China trade war concerns returning and Amazon (AMZN) tumbling on several Trump tweets, the Dow Jones and S&P 500 index sank below their 200-day lines Monday. The Nasdaq composite isn't far behind.
Meanwhile, polling shows that most Americans haven't noticed bigger paychecks as tax cuts lowered their withholdings earlier this year. Average hourly wages rose just 2.6% from a year ago in February, the Labor Department reported. Some of the tax-cut dividends will come via a bigger child tax credit that is paid at tax time.
Wage Gains On The Way
Wage gains appear likely to pick up momentum. Target (TGT) announced a hike in its minimum wage to $12 an hour last month. That followed Target's increase to $11 in October. After tax cuts passed in December, Walmart (WMT) and CVS Health (CVS) raised their minimum wages to $11 an hour. While dozens of major employers have hiked base wages, it's still unclear if the middle class will get a lift.
The Economic Optimism Index's other two main subindexes also retreated.
The six-month personal financial outlook index fell to 60.7, slipping further from January's 14-year high of 64.0.
Meanwhile, the measure of confidence in federal economic policies slipped 2.6 points to 47.4. March's neutral reading was the second-most favorable view of government since 2007. The gauge briefly turned positive in Trump's post-election honeymoon.
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