The IBD/TIPP Economic Optimism Index improved by 1.8 points, or 3.8%, in April posting 49.3 vs. 47.5 in March. The index is 5.8 points above its 12-month average of 43.5 and 4.9 points above its reading of 44.4 in December 2007 when the economy entered into the recession, and 0.6 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 906 adults from March 30 to April 5. The margin of error is +/-3.3 percentage points.

The IBD/TIPP Economic Optimism Index has three key components, all of which increased in April.

  • The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, gained 3.3 points, or 6.8%, to 52.1.  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, increased 0.6 points, or 1.1%, to reach 54.8.
  • Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working rose 1.6 points, or 4.1%, to reach 41.0.

"Consumer confidence improved despite concerns about gasoline prices and persisting high unemployment. According to our survey, 24% of households have at least one member of household unemployed looking for employment now which translates to approximately 30 million Americans," said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner.

“April’s weaker-than-expected jobs data confirm that the economic recovery’s strength is flagging,” said Terry Jones, associate editor of Investor’s Business Daily. “If gasoline prices remain high, the notion that the economy is firmly expanding may be tested by new data in coming weeks.”

The Breakdown

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

On the Economic Outlook component, fourteen of the 21 groups that IBD/TIPP tracks scored in optimistic territory.   Eighteen groups improved in April.

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

On the Federal Policies component, two of the 21 demographic groups tracked were above 50. Thirteen groups advanced on the component and eight declined.

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