Americans were more upbeat in the latest IBD/TIPP Economic Optimism Index. But there was a marked split between those living in states thumped by the plunge in oil prices, and those outside the energy patch who were benefitting from cheaper gasoline prices.
The Economic Optimism Index rose 2.2 points to 51.3, nearly regaining January's 51.5, which was the best since October 2012. Readings over 50 signal optimism.
The Six-Month Economic Outlook Index soared 4.6 points in April, its biggest monthly gain since June 2013. The Personal Financial Outlook Index fell to 56.7, but from a 2 1/2-year high of 58.2.
But a closer look at states dependent on the energy industry vs. those which aren't reveals a stark divide. Energy states, which IBD defined as Texas, Oklahoma, North Dakota, Arkansas, New Mexico, Louisiana, Colorado, Montana, Alaska and Pennsylvania, had sentiment lagging non-energy-producing states in nearly all categories.
The Economic Optimism Index was 47.5 in energy boom states while in non-energy states it was 52.2. It was the same story for the Six-Month Economic Outlook Index, 47.3 for energy states, and 52.6 for non. The gap in the Personal Financial Outlook Index was nearly 10 points, with energy state respondents at 49.3, and those in non-energy states at 58.5.
Non-producer states are enjoying the sharp drop in gas prices from last summer's highs. That spurred sales of pickups, SUVs and other gas guzzlers by General Motors (NYSE:GM), Ford (NYSE:F) and Fiat Chrysler's (NYSE:FCAU) Jeep.
But fully a third of announced job cuts in the first quarter came directly from the oil price downturn, said placement firm Challenger, Gray and Christmas in its March report last week. Houston-based oil-field services giants Schlumberger (NYSE:SLB) and Halliburton (NYSE:HAL) have announced plans to cut thousands of jobs in recent months.
"The drop in the price of oil has taken a significant toll on oil field services, energy providers, pipelines, and related manufacturing this year," Challenger said in a statement.
Nonfarm payrolls rose just 126,000 nationwide last month, partly due to the weather. But mining jobs, including oil-related work, fell by 11,000 in March and 30,000 so far in 2015.
Oil-related job cuts may start to slow: Energy firms announced plans to lay off 1,279 workers in March, down from 16,000 in February. But for oil patch states, other questions remain: the health of the service economy surrounding energy firms, the reliability of tax revenues, and so on.
Some of that uncertainty may be trickling through to the broader economy. Some 42% of all IBD/TIPP respondents still say the U.S. is in a recession in April, nearly six years after the economic recovery began.
Yet recent data has been fitful, making it hard to get a clear read on whether the economy is turning down or just taking a beating from temporary factors — the oil price plunge, severe winter weather, and the West Coast ports labor slowdown, for example.