The IBD/TIPP Economic Optimism Index declined 1.1 points, or 2.0%, in March, posting a reading of 55.3 vs. 56.4 in February 2017. The index is 4.6 points above its 12-month average of 50.7, 10.9 points above its reading of 44.4 in December 2007 when the economy entered the last recession, and 6.1 points above 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 telephone poll of 909 adults from February 24 to March 4 using live interviewers and both cell phone and landlines. The margin of error is +/-3.3 percentage points.
The IBD/TIPP Economic Optimism Index has three key components. This month, all the three index components declined.
• The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, declined 2.0 points, or 3.6%, to 53.6. 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 0.2 points, or 0.3%, to 62.6.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, dropped 1.3 points, or 2.6%, to 49.6.
“A majority of Americans think that the economy is improving. They are also optimistic President Donald Trump will deliver on his promises such as tax cuts and less regulations which are likely to boost U.S. employment and grow the economy,” said Raghavan Mayur, president of TechnoMetrica, IBD's polling partner. “The stock market has also posted spectacular gains since he won the election.”
This month, 19 of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. Five groups improved on the index, while 16 declined.
On the Economic Outlook component, 13 of the 21 groups that IBD/TIPP tracks scored in optimistic territory. Six groups improved on the component, while 15 declined.
On the Personal Financial component, 21 groups IBD/TIPP tracks scored in optimistic territory. Ten groups increased, while eleven declined.
On the Federal Policies component, 9 of the 21 demographic groups tracked were above 50. Seven groups advanced on the component and fourteen declined.