Americans have grown more pessimistic about the U.S. economy's recovery from the coronavirus lockdown, as Covid-19 cases surged anew, the July IBD/TIPP Poll shows. The six-month economic outlook index relapsed, falling through April's Covid-19 floor to the lowest level since September 2015.
The six-month outlook gauge fell 5.1 points to 37.3, undercutting April's 38 reading. The overall IBD/TIPP Economic Optimism Index backpedaled for a second month, slipping 3 points to 44 from 47 in June and a Covid recovery high of 49.7, just below the neutral 50 level. Readings below 50 reflect pessimism.
The IBD/TIPP Economic Optimism Index is a composite of three major subindexes. They track views of near-term prospects for the U.S. economy, the outlook for personal finances, and views of how well government economic policies are working.
The IBD/TIPP Economic Optimism Index and the six-month economic outlook both hit the lowest levels since September 2015.
The relapse likely reflects concern about the impact of surging Covid-19 cases, especially across the Sun Belt. Texas, Florida and Arizona are among states that have reversed some reopening steps, while a number of other states have hit the brakes on a further relaxing of social distancing restrictions. A growing number of localities are adopting mask mandates.
Deepening economic pessimism raises the stakes for the next fiscal stimulus. The $600 weekly boost to unemployment benefits is set to expire July 31.
Covid-19 Surge Turns Investors Negative
Political views are always a factor in how Americans view the U.S. economy. Under President Trump, Republicans are invariably more upbeat about the outlook, just as they were gloomier under President Obama.
The IBD/TIPP Economic Optimism Index slipped among each political grouping, falling 2.4 points to 32.9 among Democrats, 3.9 points to 38.6 among independents and 1.2 points to 61.6 among Republicans.
Among self-described investors with at least $10,000 in household-owned stocks or mutual funds, the IBD/TIPP Economic Optimism Index fell 3.4 points to 49.4.
That means investor sentiment is now a net negative, despite the stock market weathering the Covid-19 pandemic much better than the overall economy.
Among noninvestors, the index fell 2.1 points to 40.
Economic Optimism Index Components
The six-month outlook for the U.S. economy has slumped just under 20 points from February's 57 reading, which was just below the 13-year high of 57.5 in February 2018 that came on the heels of tax cuts.
The personal finances subindex rose 1.3 points to 51.1, returning to optimistic territory. The index has fallen 13.5 points since hitting a 15-month high of 64.6 points in January.
The federal policies subindex sank 5.2 points to 43.5 in July. February's 57.9 reading was the highest since June 2002.
The July IBD/TIPP Poll reflects an online survey of 1,213 adults from June 27 to June 30.
Please click here to read the original article in Investor's Business Daily.