Americans' pessimism over the U.S. economy eased a bit over the past month, but near-term expectations remained bleak amid renewed coronavirus restrictions, the new IBD/TIPP Poll finds. After hitting a coronavirus crisis low at the start of July, the six-month economic outlook index rose 2.5 points to 39.8, still well below the 50 neutral level.
The overall IBD/TIPP Economic Optimism Index rose to 46.8, up 2.8 points from July's crisis low, but marked the fifth straight month of outright pessimism. The IBD/TIPP Poll reflects pessimism that's a bit deeper than in May (49.7) or June (47.0), when the coronavirus seemed to be more in check and the U.S. economy was in reopening mode.
U.S. Economy Slows As Covid Wave Crests, Nasdaq Hits New Peak
The summer surge in coronavirus cases appeared to crest by late July. Coronavirus cases fell in 32 states and the District of Columbia in the week through Monday, IBD Covid Heat Map data shows. Yet widening restrictions, including a statewide shutdown of indoor dining ordered by California Gov. Gavin Newsom on July 13, have taken a toll.
The progress in reversing the tide of unemployment caused by coronavirus lockdowns has come close to a standstill. Continuing claims for unemployment benefits stood just below 17 million in the week of July 18, higher than in late June. Yet federal fiscal support and booming tech stocks helped buck up personal finances in July. While the Dow Jones and S&P 500 haven't quite reclaimed their pre-coronavirus peaks, the tech heavy Nasadaq composite blew past its old peak by 1,000 points.
The debate over the next fiscal stimulus package may have a big impact on economic confidence in coming weeks and months. Democrats and Republicans have agreed on another $1,200 stimulus check. But a $600 weekly boost to unemployment benefits just lapsed. There's still no agreement on how high ongoing benefits should be.
Among self-described investors with at least $10,000 in household-owned stocks or mutual funds, the six-month economic outlook index rose 3.5 points to 46.2, still moderately pessimistic. Among noninvestors, near-term expectations for the U.S. economy remained extremely bleak, slipping to 33 from 33.6.
Economic Optimism Index Components
The IBD/TIPP Economic Optimism Index is a composite of three major subindexes. They track views of near-term prospects for the U.S. economy, the outlook for personal finances, and views of how well government economic policies are working.
The six-month outlook for the U.S. economy has slumped just under 17.2 points from February's 57 reading, which was just shy of a 15-year high.
The personal finances subindex rose 2.2 points to 53.3. The index hit a crisis low of 49.8 in June. January 2020 saw a 15-month high of 64.6 points before the coronavirus spread outside China.
The federal policies subindex rose 3.7 points to 47.2 in August. February's 57.9 reading was the highest since June 2002.
The July IBD/TIPP Poll reflects an online survey of 1,212 adults from July 25 to July 28.
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