LOS ANGELES (January 12, 2018) — The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, increased in January. The overall Economic Optimism reading rose from 51.9 to 55.1, up 6.2 percent. This marks 16 consecutive months in which the index has remained in positive territory, continuing its streak as the longest stretch in more than a decade.
In addition to the Economic Optimism Index, IBD/TIPP surveyed respondents on key political issues for the separate Presidential Leadership Index and National Outlook Index, as well as the Financial Related Stress Index (see separate story here for details).
The Presidential Leadership Index rebounded after a slight dip in December, climbing 2.9 percent to 39.6 in January but still remaining well below the long-term average of 49.4. The National Outlook Index was up 7.4 percent to 45.1, its highest level since May 2017. A reading below 50 indicates pessimism while a reading above 50 signals optimism for these IBD/TIPP indexes. Additionally, the Financial Related Stress Index reflects the lowest degree of personal financial stress since IBD/TIPP began tracking the measure in 2007. It had a reading of 51.5 in January.
The IBD/TIPP Economic Optimism Index has established a strong track record of foreshadowing the confidence indicators issued later each month by the University of Michigan and The Conference Board. IBD/TIPP conducted its national telephone poll of 901 adults from January 1- 10, using live interviewers and both cell phone and landline numbers. The margin of error is +/-3.3 percentage points.
“Despite media predictions the tax plan would be unpopular with Americans, our latest poll indicates that people feel less stressed about their personal finances and have a more positive outlook compared to recent months,” said Terry Jones, IBD's Commentary Editor. “People are not quite ready to give Trump the credit, as there was a 10-point difference between his job approval rating and handling of the economy, but he did get a solid bump on the two components that have challenged him most across his presidency: morals and ethics, and presidential leadership.”
The IBD/TIPP Economic Optimism Index has three key components. This month, two of the 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, returned to positive territory with an 11.4 percentage gain. At 55.5, the component remains substantially above its 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 by 8.3 percent, rising from 59.1 to 64.0.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, was the only component to drop, and it did so for the second consecutive month. This component declined by 2.1 percent to 45.7, down from 46.7.
“Solid GDP growth, record employment levels, and powerful stock market gains have boosted consumer sentiment,” noted Raghavan Mayur, president of TechnoMetrica, IBD's polling partner. “In addition, many welcome the recent tax reform. Nearly eighty percent think that the economy is improving. But rising oil prices, unpredictable North Korea, unrest in Iran, and the ongoing investigation by Special counsel Robert Mueller are some risk factors that could trigger a reversal.”
This month, 18 of 21 demographic groups -- such as age, income, race and party preference -- that IBD/TIPP tracks were above 50 on the Economic Optimism Index. That’s up from 15 of 21 last month. Nineteen groups improved on the index, while two declined.
On the Economic Outlook component, 18 of the 21 groups that IBD/TIPP tracks scored in optimistic territory. Twenty groups improved on the component while just one declined.
On the Personal Financial component, all 21 groups IBD/TIPP tracks scored in optimistic territory. Twenty groups increased, while just one decreased.
On the Federal Policies component, three of the 21 demographic groups tracked were above 50. Nine groups advanced on the component and 12 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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