The IBD/TIPP Economic Optimism Index declined by 3.5  points, or 7.2%, in December, posting 45.1 vs. 48.6 in November.  The index is 3.3 points below its 12-month average of 48.4, 0.7 points above its reading of 44.4 in December 2007 when the economy entered into the recession, and 4.7 points below 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 806 adults from November 30 to December 8. The margin of error is +/-3.5 percentage points.

The IBD/TIPP Economic Optimism Index has three key components.  This month, all three components declined.

•    The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, dropped 4.1 points, or 8.8%, to 42.7.  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, declined 4.3 points, or 7.7%, to 51.2.
 
•    Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working slipped 2.0 points, or 4.6%, to reach 41.5.
    
"This month the Republicans post their lowest confidence since our index’s inception, 12 years ago.  The uncertainties of the fiscal cliff, gas prices and high unemployment are not helping confidence,” said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner.

The Breakdown

This month, five of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. Only one group improved on the component and 20 declined.
 
On the Economic Outlook component, three of the 21 groups that IBD/TIPP tracks scored in optimistic territory.   Three groups improved on the component and 18 declined.

On the Personal Financial component, 12 of the 21 of the groups IBD/TIPP tracks scored in optimistic territory. Two groups improved on the component and 19 declined.

On the Federal Policies component, four of the 21 demographic groups tracked were above 50.  Eight groups advanced on the component and 13 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.

For more information, go to www.tipponline.com. To license the IBD/TIPP Poll, please contact: This email address is being protected from spambots. You need JavaScript enabled to view it.

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