The IBD/TIPP Economic Optimism Index fell 1.4 points, or 3%, in March, at 45.4 compared to 46.8 in February. This month's reading puts the index 3.1 points below its 12-month average of 48.5 but 1 point above its reading of 44.4 in December 2007 when the economy entered into the recession. It's 5.7 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 903 adults from March 1 to March 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 2.3 points, or 4.7%, to 46.4. The index is still 14.3 points above its level in December 2007.
• The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, dropped 2.8 points, or 5.2%, to 50.7.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, rose 0.09 points, or 2.3%, to 39.2.
"Confidence has been hurt by continued job declines and concerns about the economy's lack of vigor," said Terry Jones, associate editor of Investor's Business Daily. "Despite the spending of trillions of dollars of taxpayer money on stimulus and "too-big-to-fail" bailouts, the economy doesn't appear to have entered into anything resembling a self-sustaining expansion, and continued attempts to pass a wildly unpopular health-care bill have only added to the gloom."
This month, only three of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. The highest index scores were for Democrats (63.4), Black/Hispanic Americans (58.8) and 18 to 24 year olds (54.1).
Six groups improved on the index, while fifteen groups declined.
On the Economic Outlook component, three 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 Democrats (66.8), Black/Hispanic Americans (58.6), and those living in the Northeast (50.6).
On the Personal Financial component, thirteen of the groups IBD/TIPP tracks scored in optimistic territory. Four groups advanced on the index while seventeen groups declined.
On the Federal Policies component, only three of the 21 demographic groups tracked were above 50. Twelve groups advanced on the index, while nine groups 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.
An analysis of Final Certified Results of Election 04 and Election 08 show that TIPP was the most accurate pollster of both campaign seasons. For more information, go to www.tipponline.com
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