The IBD/TIPP Economic Optimism Index increased 4 points, or 8.6%, in August, posting 50.3 vs. 46.3 in July. Across the board, the index showed a bounce in economic confidence as it returns to positive territory. Index readings above 50 indicate optimism; below 50 indicate pessimism.

The poll also shows that President Obama is not benefiting from the rebound. Overall, he gets only a C grade for his handling of the economy, and a C- for his managing of the federal budget.

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

  • The Six-Month Economic Outlook, a measure of how consumers feel about the economy's prospects in the next six months, increased 7.3 points, or 16.2%, to reach 52.5. When compared to December 2007, the index shows a gain of 20.4 points.
  • The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, moved up 2 points, or 3.8%, to reach 54.1.
  • Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, rose 2.8 points, or 6.7%, to reach 44.3.

Wide Schism

The data also show the "bipolar" status of the country. Democrats and Republicans have diametrically opposing views, with Independent voters closer to Republicans.

For instance, the economic optimism index among Democrats is an optimistic 67.5, among Republicans is a pessimistic 33.2, and Independents are closer to Republicans with an index score of 45.7.

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Second, the bipolarity infiltrates how Americans see the president's handling of the economy. Democrats see the president very favorably with 70% giving him an A or B; Republicans are very harsh in grading him, with an overwhelming 62% giving him a D or F.

Grades from Independents are better distributed, with 36% giving an A or B and 41% a D or F. The GPA shows that Independents (GPA = 1.77) are closer to Republicans (GPA = 1.14) than Democrats (GPA = 2.90).

The third example of the schism in public opinion is the way Americans see the president's managing of the federal budget. A majority of Democrats (59%) give him an A or B; an overwhelming 69% of Republicans give him only a D or F.

Independents are split with 32% giving him good grades and 48% giving him poor grades. The Independents (GPA = 1.55) are closer to Republicans (GPA = 0.88) than Democrats (GPA = 2.62).

One more example of the perception divide is how Americans see the efficacy of the $789 billion stimulus passed in February. Overall, half (50%) believe the stimulus is effective. An overwhelming 72% of Democrats say it's been effective, but the same share (72%) of Republicans say it has not. Independents are divided, with 48% seeing it as effective and 50% as not effective.

Some food for thought: Based on their great optimism, are Democrats spending more? And are Republicans and Independents tightening their belts because of their pessimism?

Mayur is president of TechnoMetrica Market Intelligence, which directs the IBD/TIPP Poll that was the most accurate in the last two presidential elections.

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