LOS ANGELES -- May 8, 2018 -- The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, rose 1.9 percent in May to a reading of 53.6, marking a record run of 20 consecutive months in positive territory. The index has remained above 50 since October 2016. 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 900 adults from April 26-May 4, 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 another 2.2 percent to 42.1, which is its highest level since May 2017. The National Outlook Index also increased to 46.8, up 5.6 percent since April. Additionally, the Financial Related Stress Index decreased 5.1 percent to an all-time low of 49.9, signaling that Americans are experiencing the lowest level of financial concern of any point since IBD/TIPP began tracking the measure in December 2007.
“Despite all of the political turmoil happening in Washington, Americans seem to feel good about where we are as a country,” said Terry Jones, IBD's Commentary Editor. “For example, this month we saw the Standing in the World component rise 13.8 percent, largely because of reported positive steps with North Korea. Also, the Quality of Life component hit its highest level since October 2004. Yet, even with the economy generally performing well and low unemployment, people remain concerned about the nation’s moral direction, with the IBD/TIPP Morals & Ethics component staying in the high 20’s.”
The flagship IBD/TIPP Economic Optimism Index has three key components. This month, all three components increased.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, returned to positive territory with a reading of 51.3. After a slight two-month dip, the component rose 3.2 percent over April’s reading of 49.7. 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, increased by 0.5 percent, from 60.7 to 61.0.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, rose 2.3 percent in May. The reading increased from 47.4 to 48.5, although the measure remains in negative territory for the second consecutive month.
“Americans are getting used to a political new norm,” noted Raghavan Mayur, president of TechnoMetrica, IBD's polling partner. “With favorable movement on North Korea and strong economic prospects over the short and long-term, they are enjoying this period of low financial stress, despite closely follow news regarding Russia, the role of intelligence agencies, and the special counsel’s investigation. While the majority of Americans feel that talks of impeachment are premature, a solid 40 percent feel they are appropriate at this point, which is interesting given the general positivity that people feel about the current state of the country.”
This month, 14 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 17 last month. Fourteen groups improved on the index, while seven fell. Last month, only two groups improved on the index, while 19 declined.
On the Economic Outlook component, 11 of the 21 groups that IBD/TIPP tracks scored in optimistic territory. In the previous month, 12 of 21 groups were optimistic.
On the Personal Financial component, once again all 21 groups IBD/TIPP tracks remained in optimistic territory, as ten groups increased, ten declined and one stayed the same.
On the Federal Policies component, six of the 21 demographic groups tracked were above 50. Eleven groups rose, while ten fell.
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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