The IBD/TIPP Economic Optimism Index declined by 1.9 points, or 3.9%, in July, posting 47.1 vs. 49.0 in June. The index is 0.3 points below its 12-month average of 47.4, 2.7 points above its reading of 44.4 in December 2007 when the economy entered the recession, and 2.6 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 857 adults from June 24 to June 29. The margin of error is +/-3.4 percentage points.
The IBD/TIPP Economic Optimism Index has three key components. This month, all the three components declined.
• The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, declined 3.1 points, or 6.1%, to 48.1. 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, dropped 1.5 points, or 2.6%, to 56.1.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies fell 1.1 points, or 2.9%, to 37.2.
“A wobbly stock market and persisting high unemployment dampened Americans’ confidence this month,” said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD’s polling partner.“Fifty-five percent think that the U.S. is in a recession. While 52% feel the economy is improving, 46% think the economy is not improving. Twenty-five percent of households have at least one person looking for full-time employment,”
This month, five of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. Six groups improved and 15 declined.
On the Economic Outlook component, seven of the 21 groups that IBD/TIPP tracks scored in optimistic territory. Five groups improved and 16 declined.
On the Personal Financial component, 19of the 21 of the groups IBD/TIPP tracks scored in optimistic territory. Six groups improved on the component and 15 declined.
On the Federal Policies component, only two of the 21 demographic groups tracked was above 50. Ten groups advanced on the component and 11 declined.
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