LOS ANGELES (February 9, 2010) — The IBD/TIPP Economic Optimism Index decreased 2.0 points, or 4.1%, in February, posting 46.8 vs. 48.8 in January. This month's reading puts the index 1.7 points below its 12-month average of 48.5 and 2.4 points above its reading of 44.4 in December 2007 when the economy entered into the recession, and 4.3 points below its all-time average of 51.1.
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 902 adults from February 1 to February 7. The margin of error is +/-3.3 percentage points.
The IBD/TIPP Economic Optimism Index has three key components, two of which declined in February.
• The Six-Month Economic Outlook, a measure of how consumers feel about the economy's prospects in the next six months, fell 3.1 points, or 6.0%, to 48.7. When compared to December 2007, the index shows a gain of 16.6 points.
• The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, rose 0.1 points, or 0.2%, to reach 53.5.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, declined 2.9 points, or 7.0%, to reach 38.3.
"Persistent high unemployment and a wobbly stock market dampened January's optimism," said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner. "Optimism tends to decline in February –and over the past eight years, optimism weakened in February six times, rose once, and maintained its January level once."
"Americans worry that some of the cures now being proposed in Washington will be even worse than the disease," said Terry Jones, associate editor of Investor's Business Daily. "With the stimulus and TARP programs spending more than a trillion dollars, yet no growth in jobs to show for it, it's hard to see a strong turnaround in consumer sentiment without a big drop in unemployment."
This month, only five of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. The highest index scores were for 18 to 24 year olds (64.8), Democrats (61.3) and Black/Hispanic Americans (60.6).
Six groups improved on the index, while fifteen groups declined.
On the Economic Outlook component, eight of the groups IBD/TIPP tracks scored in optimistic territory. Five groups advanced on the index, while fifteen declined and one remained the same. The highest index scores were for 18 to 24 year olds (68.2), Black/Hispanic Americans (66.3), and Democrats (65.7).
On the Personal Financial component, 18 of the groups IBD/TIPP tracks scored in optimistic territory. Eight groups advanced on the index while thirteen groups declined.
On the Federal Policies component, only three of the 21 demographic groups tracked were above 50. Four groups advanced on the index, while seventeen groups declined.