The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, showed positive momentum this month, climbing 4.6 percent to 52.2 and above the 12-month average of 51. This marks the eleventh consecutive month in positive territory, which is the longest stretch in more than a decade. It is also the highest reading since March, ending a slight four-month slide. The overall economic optimism reading is notable because it stands in sharp contrast to President Trump’s approval ratings, which dropped across all measures of the separate Presidential Leadership Index.
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 July 28 to August 5 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 here for details).
“It’s not unprecedented for people to be unhappy with the president while the economy performs well, but it is rare,” said Terry Jones, IBD's Commentary Editor. "Unemployment is at its lowest point in 16 years and the Dow just hit a record high, and yet Democrats and Independents alike are unhappy with Trump, while the enthusiasm of Republicans has waned. The gap between the Economic Optimism Index and the Presidential Leadership Index is the largest since the presidential election month of November, 2008.”
The IBD/TIPP Economic Optimism Index has three key components. This month, all three index components increased.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, is hovering just under positive, with a reading of 49.9. This marks a 3.1 percent improvement over July’s reading and remains considerably higher than the 32.1 reading 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, is the highest reading of the three index components. It increased slightly for the third consecutive month, ticking up from 60.0 to 60.2 -- a 0.3 percent rise.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, experienced the biggest move, rising 12.1 percent to 47.3 from 42.2.
"Despite Americans’ high economic optimism, multiple factors are collectively offsetting the boost that the economy should be giving Trump and driving down his approval rating," noted Raghavan Mayur, president of TechnoMetrica, IBD's polling partner. “Above all, the Russia cloud is definitely taking a toll, but that may only be for the near-term as the president makes the improving economy more of a focus.”
This month, 15 of the 21 demographic groups -- such as age, income, race and party preference -- that IBD/TIPP tracks were above 50 on the Economic Optimism Index. Sixteen groups improved on the index, while four declined.
On the Economic Outlook component, 10 of the 21 groups that IBD/TIPP tracks scored in optimistic territory. Fourteen groups improved on the component while seven declined.
On the Personal Financial component, 20 groups IBD/TIPP tracks scored in optimistic territory. Eleven groups increased while 10 declined.
On the Federal Policies component, four of the 21 demographic groups tracked were above 50. Nineteen groups advanced on the component and just 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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