The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, indicates that consumer confidence has held steady, with the May reading at 51.3, little changed from April when the index stood at 51.7. This remains slightly above the 12-month average of 51. It also marks the eighth consecutive month above 50, which indicates optimism.
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 904 adults from April 28 to May 4 using live interviewers and both cell phone and landline numbers. The margin of error is +/-3.3 percentage points. In addition to the Economic Optimism Index, IBD/TIPP surveyed respondents on issues of presidential leadership and key political issues (see separate story -- Trump's Approval Climbs As His Tax Cut Plan Wins Strong Support — IBD/TIPP Poll -- for details).
“Despite a rough first 100 days for President Trump, the market has continued to perform well, and there is optimism around his proposed tax cuts. These factors have contributed to the index overall remaining in positive territory,” said Terry Jones, Commentary Editor of Investor’s Business Daily. “Whether it remains there will be interesting to watch as there has been a very slight down trend.”
The IBD/TIPP Economic Optimism Index has three key components. This month, two of 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 2.9 percent to 49.6 from last month’s 51.1. This is the second straight month of decline and takes the index into negative territory. For comparison, this 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 6.9 percent to 57.1 from 61.3. It remains within positive territory, but it too is in its second straight month of decline.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, rose sharply to 47.1, a 10.8 percent increase from 42.6 in April, regaining some of the ground that was lost last month.
“Americans are encouraged by a number of Trump’s domestic initiatives, such as his plans for tax reform and his focus on job creation. In fact, a majority of Americans approve each of the tax reform plan’s major proposals. The recent stellar jobs report, relatively low gasoline prices, growing confidence in monetary policy and a strong stock market are also helping to keep the sentiment upbeat,” said Raghavan Mayur, president of TechnoMetrica, IBD's polling partner.
This month, 12 of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. Nine groups improved on the index, while 10 declined. Two groups maintained the same reading. This is the sharpest change since Trump took office in January, when 20 of the 21 demographic groups -- such as age, income, race and party preference -- tracked by the IBD/TIPP Poll were above 50 on the Economic Optimism Index and 15 groups expressed increased optimism.
On the Economic Outlook component, 11 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, 20 groups IBD/TIPP tracks scored in optimistic territory. One group increased, while 19 declined.
On the Federal Policies component, six of the 21 demographic groups tracked were above 50. Nineteen groups advanced on the component and two declined.
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ABOUT THE IBD©/TIPP POLL
The IBD/TIPP Economic Optimism Index is the earliest take on consumer confidence each month and predicts with good reliability monthly changes in sentiment in well-known polls by The Conference Board and the University of Michigan. The IBD/TIPP Economic Optimism Index is based on a survey of 900-plus adults chosen at random nationwide. The national poll is generally conducted in the first week of the month by live interviewers and both cell phone and landlines.
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