The IBD/TIPP Economic Optimism Index improved by 6.2 points, or 13.6%, in September posting 51.8 vs. 45.6 in August. The index is 5.4 points above its 12-month average of 46.4, 7.4 points above its reading of 44.4 in December 2007 when the economy entered into the recession, and 2.0 points above its all-time average of 49.8.
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 871 adults from September 4 to September 9. The margin of error is +/-3.4 percentage points.
The IBD/TIPP Economic Optimism Index has three key components, all of which improved in September.
• The Six-Month Economic Outlook, a measure of how consumers feel about the economy's prospects in the next six months, gained 10.7 points, or 24.0%, to 55.2. 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, improved 3.0 points, or 5.4%, to reach 58.5.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working rose 4.9 points, or 13.4%, to reach 41.6.
"Confidence showed an unusual jump despite high gasoline prices and persisting high unemployment," said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner. "Democrats' upbeat sentiment after the convention and recent stock market gains contribute to the optimism. Still, according to our survey, two-thirds think that high gasoline prices are really hurting them financially and 26% of households have at least one member of their household unemployed and looking for employment."
"The post-convention confidence bounce among Democrats is noteworthy," said Terry Jones, associate editor of Investor's Business Daily. "But, based on recent trends, strong improvements in jobs and incomes aren't likely anytime soon, and that's likely to weigh on confidence as the election approaches."
This month, 15 of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. All 21 groups increased on the index.
On the Economic Outlook component, 19 of the 21 groups that IBD/TIPP tracks scored in optimistic territory. All 21 groups improved this month.
On the Personal Financial component, 20 of the groups IBD/TIPP tracks scored in optimistic territory. Nineteen groups improved on the component and two declined.
On the Federal Policies component, two of the 21 demographic groups tracked were above 50. Twenty groups advanced on the component and one 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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