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 908 adults from September 7 to September 12. The margin of error is +/-3.5 percentage points.
The IBD/TIPP Economic Optimism Index has three key components, two of which improved in August.
• The Six-Month Economic Outlook, a measure of how consumers feel about the economy's prospects in the next six months, declined 0.9 points, or 2.0%, to 44.2. When compared to December 2007, the index shows a gain of 12.1 points.
• The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, improved 3.6 points, or 7.3%, to reach 52.8.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, improved 2.2 points, or 6.0%, to reach 38.8.
"Though consumers are pessimistic about the outlook for the economy, they are optimistic about their personal finances. Jobs continue to hurt confidence. Forty two percent of consumers think that chances of a second recession are high," said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner.
"Recent rallies in the stock market may be helping some Americans feel better about their own finances," said Terry Jones, associate editor of Investor's Business Daily. "But the continued slow-growth recovery and 9.6% unemployment rate have certainly hurt overall."
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 Black/Hispanic Americans (60.4) and Democrats (60.1). The reading for Republicans was 29.0 and Independents was 43.5.
Sixteen groups advanced on the index, five groups declined.
On the Economic Outlook component, four of the groups IBD/TIPP tracks scored in optimistic territory. The highest index scores were for 18 to 24 year olds (51.3), Democrats (58.3), and Black/Hispanic Americans (58.5).
On the Personal Financial component, seventeen of the groups IBD/TIPP tracks scored in optimistic territory. The index improved from its twelve month low of 49.2 in August to 52.8 in September. Nineteen groups advanced on the index while two groups declined.
On the Federal Policies component, only two of the 21 demographic groups tracked were above 50. The index improved from its twelve month low of 36.6 in August to 38.8 in September. Thirteen groups advanced on the index, while eight 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
ABOUT INVESTOR'S BUSINESS DAILY (IBD)
Investor's Business Daily is a leading financial news and research organization recognized for proprietary stock screens, comparative performance ratings and a record of identifying stock leaders as they emerge. IBD's companion website, Investors.com, offers stock tools and research for investors of every level. These include the IBD Learning Center, intraday reports on market action and the IBD StockCheckup®. IBD hosts popular investment workshops and provides Home Study programs based on The CAN SLIM® Investing System. The newspaper was founded April 9, 1984 by William J. O'Neil, who originated the investing system that has outperformed major market indexes* for years.
*The American Association of Individual Investors' independent "real time" study found IBD's CAN SLIM investing achieved a 1519.8% gain vs. 54.9% for the S&P 500 the past nine-and-one-half years (1998 through June 2007, AAII Stock Screen).