Consumer Confidence Edges Up, Americans Continue to be Pessimistic

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The IBD/TIPP Economic Optimism Index improved by 0.3 points, or 0.7%, in November posting 40.6 vs. 40.3 in October.  The index is 2.6 points below its 12-month average of 43.2 and 3.8 points below its reading of 44.4 in December 2007 when the economy entered into the recession, and 9.4 points below its all-time average of 50.0.

Note: Index readings above 50 indicate optimism; below 50 indicate pessimism.

The IBD/TIPP Economic Optimism Index has a good track record of foreshadowing the confidence indicators put out later each month by the University of Michigan and The Conference Board.  IBD/TIPP conducted the national poll of 901 adults from October 31 to November 6. The margin of error is +/-3.3 percentage points.

The IBD/TIPP Economic Optimism Index has three key components, two of which declined in November.

•    The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, increased 4.1 points, or 11.2%, to 40.8.  The sub-index was 32.1 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, declined 2.3 points, or 4.4%, to reach 49.6.
•    Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working slipped 0.8 points, or 2.5%, to reach 31.4.
    
"Consumer confidence continues to be in the vulnerable territory, despite its modest improvement second month in a row," said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner.

“Like the economy itself, the IBD/TIPP optimism index is inching higher, but it lacks the kind of power expected in a strong recovery,” said Terry Jones, associate editor of Investor’s Business Daily. “The continued low level of confidence shown in the poll suggests that, at best, the economy will show only tepid growth in the coming months.”

The Breakdown

This month, three of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. Twelve groups increased on the index.

On the Economic Outlook component, three of the 21 groups that IBD/TIPP tracks scored in optimistic territory.   Nineteen groups improved in November.

On the Personal Financial component, ten of the groups IBD/TIPP tracks scored in optimistic territory. Six groups improved on the component and fifteen declined.

On the Federal Policies component, all of the 21 demographic groups tracked were below 50.  Seven groups advanced on the component and fourteen declined.
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ABOUT THE IBD/TIPP POLL
The IBD/TIPP Economic Optimism Index is the earliest take on consumer confidence each month and predicts with 80% 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 poll is generally conducted in the first week of the month.

For more information, go to www.tipponline.com

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Using the proprietary CAN SLIM® Investing System and time-tested signals based on a landmark study of over 130 years of market history, IBD provides alerts to emerging high-growth stocks and major changes in market direction. Created by legendary investor and IBD founder William J. O’Neil, the CAN SLIM System has been the #1 growth strategy from 1998 – 2010, gaining 2,487.3% vs. 29.6% for the S&P 500 in an independent, real-time study by the American Association of Individual Investors.*

Investors of all levels use IBD’s flagship newspaper (print and digital editions) and award-winning website, Investors.com, to spot early market trends, screen for winning stocks and get extensive, step-by-step training. IBD also offers investment workshops across the country, and provides both subscribers and non-subscribers with a free year-long investing course through the IBD Meetup program – America’s largest network of Meetup.com investing groups.  In partnership with TechnoMetrica, IBD also conducts IBD/TIPP polls, including the nationally-recognized IBD/TIPP Economic Optimism Index.  IBD/TIPP was the most accurate pollster in both the 2008 and 2004 presidential elections, according to final FEC-certified results of those elections.  IBD is also recognized for its political and economic commentary and is home to editorial cartoonist Michael Ramirez, winner of the 2008 and 1994 Pulitzer Prize.

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IBD/TIPP Poll © 2011 Investor’s Business Daily Inc. and TechnoMetrica Inc.

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