The IBD/TIPP Economic Optimism Index gained 1.2 points, or 2.7% in November, posting a reading of 46.4 vs. 45.2 in October. The index is 0.8 points above its 12-month average of 45.6, 2.0 points above its reading of 44.4 in December 2007 when the economy entered the recession, and 2.8 points below its all-time average of 49.2.
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 910 adults from October 25 to October 29. The margin of error is +/-3.3 percentage points.
The IBD/TIPP Economic Optimism Index has three key components. This month, two 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, improved 0.5 points, or 1.1%, to 45.1. 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, increased 3.7 points, or 7.0%, to 56.2.
•Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, decreased 0.7 points, or 1.8%, to 37.8.
“For twenty-five months in a row, consumer confidence continues to be in the pessimistic territory. 52% believe that the economy is not improving and 43% still think that we are in a recession,” said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner.
“The deep level of ongoing pessimism will surely be felt in Tuesday’s elections across the country,” said Terry Jones, associate editor of Investor’s Business Daily. “That more than four out of 10 Americans believe we’re still in recession suggests profound disappointment with the current government’s conduct of economic policy.”
This month, two of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. Thirteen groups improved and seven declined. One did not change.
On the Economic Outlook component, three of the 21 groups that IBD/TIPP tracks scored in optimistic territory. Thirteen groups improved and eight declined.
On the Personal Financial component, nineteen of the 21 groups IBD/TIPP tracks scored in optimistic territory. Eighteen groups increased and three declined.
On the Federal Policies component, two of the 21 demographic groups tracked were above 50. Seven groups advanced on the component and fourteen declined.