The IBD/TIPP Economic Optimism Index maintained its June reading of 48.1 in the July survey. The index is 0.2 points above its 12-month average of 47.9, 3.7 points above its reading of 44.4 in December 2007 when the economy entered the recession, and 1.1 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 906 adults from June 26 to July 2. The margin of error is +/-3.4 percentage points.
The IBD/TIPP Economic Optimism Index has three key components. This month, two of the three components of the index declined.
• The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, dropped 0.8 points, or 1.8%, to 44.5. 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, decreased 2.1 points, or 3.6%, to 55.6.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, increased 3.0 points, or 7.3%, to 44.2.
“Americans are split on their assessment of current economic conditions – 48% think it is improving, while 49% think it is not improving. The stock market is also under pressure. On the positive side, we are seeing a general favorable leaning this month perhaps due to a halo effect of the Supreme Court’s recent rulings,” said Raghavan Mayur, president of TechnoMetrica, IBD's polling partner.
This month, six of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. Thirteen groups improved and eight groups declined.
On the Economic Outlook component, four of the 21 groups that IBD/TIPP tracks scored in optimistic territory. Ten groups improved and eleven declined.
On the Personal Financial component, nineteen of the 21 groups IBD/TIPP tracks scored in optimistic territory. Four groups increased and seventeen declined.
On the Federal Policies component, three of the 21 demographic groups tracked were above 50. Nineteen groups advanced on the component and two groups declined.