The IBD/TIPP Economic Optimism Index improved by 1.9 points, or 4.0%, in February posting 49.4 vs. 47.5 in January. The index is 7.0 points above its 12-month average of 42.4 and 5.0 points above its reading of 44.4 in December 2007 when the economy entered into the recession, and 0.4 points below its all-time average of 49.9.
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 915 adults from January 29 to February 4. The margin of error is +/-3.3 percentage points.
The IBD/TIPP Economic Optimism Index has three key components, two of which increased in February.
• The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, decreased 0.6 points, or 1.2%, to 50.2. 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, gained 1.7 points, or 3.1%, to reach 57.4.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working rose 4.5 points, or 12.5%, to reach 40.5.
"Consumer confidence shows a good improvement for the sixth month in a row, bucking the 80% probability to decline in February,” said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner.
“While the recent job report was a catalyst to boost confidence, the report does not adequately reflect the dark side of the job situation in the country,” said Terry Jones, Associate Editor of Investor’s Business Daily. “According to our survey, 22% of households have at least one member looking for employment now which translates to approximately 29 million Americans."
This month, eleven of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. Fifteen groups increased on the index.
On the Economic Outlook component, twelve of the 21 groups that IBD/TIPP tracks scored in optimistic territory. Ten groups improved in February.
On the Personal Financial component, twenty-one of the groups IBD/TIPP tracks scored in optimistic territory. Thirteen groups improved on the component and eight declined.
On the Federal Policies component, three of the 21 demographic groups tracked were above 50. Nineteen groups advanced on the component and two 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.
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