The IBD/TIPP Economic Optimism Index improved by 4.0 points, or 9.5%, in April, posting 46.2 vs. 42.2 in March. The index is 1.3 points below its 12-month average of 47.5, 1.8 points above its reading of 44.4 in December 2007 when the economy entered the recession, and 3.5 points below its all-time average of 49.7.
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 March 25 to March 30. The margin of error is +/-3.3 percentage points.
The IBD/TIPP Economic Optimism Index has three key components. This month, all of the three components improved.
• The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, gained 8.3 points, or 21.4%, to 47.1. 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, improved 0.7 points, or 1.3%, to 52.9.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working rose 3.0 points, or 8.5%, to reach 38.5.
"Americans across the board had a better view of the economic outlook in this TIPP Poll. Still a majority thinks that we are in a recession. While 50% feel the economy is improving, 47% think the economy is not improving. Twenty percent of households have at least one person looking for full-time employment,” said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner.
“The improvement in economic sentiment seems to coincide with the failure of the budget Sequester to create a disaster, despite the predictions of many experts that it would,” said Terry Jones, associate editor of Investor’s Business Daily. “That’s reflected in the solid 8.5% improvement in Americans’ confidence in federal economic policies, a key part of the overall Economic Optimism Index.”
This month, three of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. Nineteen groups improved and two declined.
On the Economic Outlook component, four of the 21 groups that IBD/TIPP tracks scored in optimistic territory. All the 21 groups improved.
On the Personal Financial component, 15 of the 21 of the groups IBD/TIPP tracks scored in optimistic territory. Thirteen groups improved on the component and eight declined.
On the Federal Policies component, two of the 21 demographic groups tracked were above 50. Sixteen groups advanced on the component and four declined. One did not change.