The IBD/TIPP Economic Optimism Index gained 1.6 points, or 3.4% in March, posting a reading of 49.1 vs. 47.5 in February. The index is 2.0 points above its 12-month average of 47.1, 4.7 points above its reading of 44.4 in December 2007 when the economy entered the recession, and 0.1 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 898 adults from February 22 to March 1. The margin of error is +/-3.4 percentage points.
The IBD/TIPP Economic Optimism Index has three key components. This month, all three components improved.
• The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, increased 0.2 points, or 0.4%, to 46.9. 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, gained 4.4 points, or 8.2%, to 58.2.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, edged up 0.2 points, or 0.5%, to 42.3.
“Gasoline prices are relatively lower as compared to last year. People have more money to spend or save. The stock market is also in a confirmed uptrend. More than one-half believe that the economy is improving and 56% feel we are not in a recession,” said Raghavan Mayur, president of TechnoMetrica, IBD's polling partner.
“It has taken some time, but the idea that energy prices are low has taken hold,” said Terry Jones, associate editor of IBD. “This, along with the continued modest but consistent growth in the number of payroll jobs, seem to be bolstering confidence among consumers.”
This month, six of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. Sixteen groups improved and five declined.
On the Economic Outlook component, seven of the 21 groups that IBD/TIPP tracks scored in optimistic territory. Twelve groups improved and nine declined.
On the Personal Financial component, all of the 21 groups IBD/TIPP tracks scored in optimistic territory. Nineteen groups increased, one declined and one did not change.
On the Federal Policies component, two of the 21 demographic groups tracked were above 50. Eleven groups advanced on the component and ten declined.