The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, showed positive momentum this month, climbing another 1.7 percent to 53.4 and above the 12-month average of 51. The index has now reached a year in positive territory, which is the longest stretch in more than a decade. It also remains the highest reading since March and has demonstrated positive momentum for the second straight month. The overall economic optimism is also now aligned with increases in the Presidential Leadership Index, which returned to its July level after experiencing a dramatic dip in August. While ratings remain low, Trump’s approval numbers climbed 12 percent to a reading of 40.2 (or 38 percent overall) from its lowest point last month. These readings come as IBD/TIPP celebrates completion of its 200th monthly poll in the the Economic Optimism Index series.
In its esteemed sixteen-year history, the IBD/TIPP Economic Optimism Index has established a strong 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 905 adults from August 23 to August 31 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).
“The economy continues to perform well, regardless of what is happening on the political stage,” said John Merline, Deputy Editor of Commentary at IBD. "Despite what pundits routinely described as a terrible month for the president, consumers remained positive and hopeful for the future. It will be interesting to see if this trend continues amidst controversial policy initiatives, such as ending DACA, and as the U.S. braces for Hurricane Irma, which may trigger another round of disaster relief funding.”
The IBD/TIPP Economic Optimism Index has three key components. This month, two of the three index components increased, while one dipped by less than half a percent.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, returned to positive territory for the first time since June. At 51.1, the index climbed by 2.4 percent. It also remains much 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, increased another three percent to a reading of 62.0. This component has increased each of the past five months.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, was the only component to decrease, after experiencing a significant rise in August. September’s reading of 47.1 fell 0.4 percent from August’s reading of 47.3.
"Americans continue to be encouraged by positive developments in the economy, such as second-quarter GDP growth hitting 3.0 percent and strong job numbers," noted Raghavan Mayur, president of TechnoMetrica, IBD's polling partner. “However, consumer confidence faces headwinds in the coming months in the aftermath of multiple hurricanes. Rising gasoline prices and the persistent threat from North Korea are risk factors that could soften sentiment.”
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. Fourteen groups improved on the index, while seven declined.
On the Economic Outlook component, nine of the 21 groups that IBD/TIPP tracks scored in optimistic territory. Twelve groups improved on the component while eight declined. One did not change.
On the Personal Financial component, all of the 21 groups IBD/TIPP tracks scored in optimistic territory. Sixteen groups increased while three declined. Two did not change.
On the Federal Policies component, six of the 21 demographic groups tracked were above 50. Six groups advanced on the component and 14 declined. One did not change.
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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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