LOS ANGELES -- August 07, 2018 -- The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, rose again overall in August, moving up 2.8 percent to 58.0 from 56.4 in July. This marks the index’s highest reading of the Trump presidency as well as a record twenty-third consecutive month in positive territory. An index reading below 50 indicates pessimism while above 50 signals optimism for the IBD/TIPP indexes.
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 939 adults from July 26-August 2, 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 key political issues for the separate Presidential Leadership Index and National Outlook Index, as well as the Financial Related Stress Index. The Presidential Leadership Index rose 3.2 percent in August, increasing from 44.3 to 45.7 while the National Outlook Index rose 6.4 percent to 49.7. Notably, the Direction of the Country component entered positive territory for the first time since January 2005, rising 13.0 percent to 50.3. Additionally, the Financial Related Stress Index reflected a reading of 47.4, down 8.1 percent to reflect an all time low (a higher stress index reading indicates more stress).
“This summer has brought no shortage of political drama, and partisan division remains strong,” said Terry Jones, IBD's Commentary Editor. “Nevertheless, the economy is propelling Trump to new heights. While Americans are somewhat nervous about tariffs, those polled largely support Trump’s view on trade.”
The flagship IBD/TIPP Economic Optimism Index has three key components. This month, two of the three components increased while one decreased.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, rose another 6.4 percent to 56.8 in August, remaining in positive territory for the fourth consecutive month. This is 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 3.7 percent from 62.8 to 65.1, the second-highest level ever. The all-time high was 65.3 set in January, 2004.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, was the only component to decline, decreasing 1.5 percent to 52.1, down from 52.9. It still remains in positive territory however.
"As the economic expansion surges ahead, and job growth remains robust, Americans’ animal spirits towards the economy have finally revived," noted Raghavan Mayur, president of TechnoMetrica, IBD's polling partner. "Consumers’ optimism was buoyed by signs of strong economic growth, including a 4.1 percent second quarter GDP reading, the fastest rate in more than four years. In addition, more Americans are starting to see the strengthening economy touch their own lives. For instance, amid a tightening labor market and new tax cuts, workers are seeing larger incomes. According to the Labor Department, wages and salaries rose 2.8 percent over 12 months through June, the largest gain in the reading since September 2008. Americans’ upbeat sentiment is also driven by the administration’s tougher stance on global trade issues, as many view the new trade tariffs as an effort to limit economic globalization and help boost American industry and jobs."
This month, 19 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 was the same number as in July, but up from 14 of 21 in June. Eighteen groups improved on the index, while two fell. Last month, 15 groups improved on the index, while 6 declined.
On the Economic Outlook component, 18 of the 21 groups that IBD/TIPP tracks scored in optimistic territory. In the previous month, just 16 groups were optimistic.
On the Personal Financial component, once again all 21 groups IBD/TIPP tracks remained in optimistic territory, as 16 groups increased and five declined. The overall index hit its second-highest level ever in August.
On the Federal Policies component, 15 of the 21 demographic groups tracked were above 50. Nine groups rose, while 12 fell.
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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