Following February’s 13-Year High, the IBD/TIPP Economic Optimism Index Drops Slightly but Continues Positive Run

LOS ANGELES, March 06, 2018 -- The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, has entered its 18th consecutive month in positive territory. This is the longest stretch in more than a decade. However, after hitting a 13-year high in February, the overall Economic Optimism reading dipped by 1.9 percent in March, from 56.7 to 55.6. It remains well within positive territory, as an index reading below 50 indicates pessimism while a reading above 50 signals optimism for the IBD/TIPP indexes.

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 Financial Related Stress Index continued to decrease, indicating the lowest degree of personal financial stress since IBD/TIPP began tracking the measure in 2007. Its current reading is 51.1.

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 February 22 to March 1, using live interviewers and both cell phone and landline numbers. The margin of error is +/-3.3 percentage points.

“The indexes show signs of both positive and negative movement after another turbulent month politically,” said Terry Jones, IBD's Commentary Editor. “We saw two particularly sizable drops -- one in the six-month economic outlook and the other in presidential morals and ethics, which has lingered in the 20s during most of the Trump presidency. Nevertheless, Americans feel good about their personal finances.”

The flagship IBD/TIPP Economic Optimism Index has three key components. This month, one of the three index components decreased, one remained the same, and one increased.

• The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, dropped 8.0 percent from last month’s 57.5, which had been the component’s highest reading since Oct 2012. Nevertheless, March’s 52.9 reading continues to indicate optimism and 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, remained unchanged at 63.8.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, continued its upward trajectory, rising 2.7 percent, from 48.7 to 50.0. This marks a return to positive territory for the first time in 13 months.

“Despite the media’s persistently negative coverage of the current administration, Americans maintain a bright outlook for the overall economy, as well as their own financial circumstances. Encouraged by rising wages and a strengthening labor market edging closer to full employment, consumers reported their lowest levels of financial stress since 2007, the year we first began monitoring the measure. Many Americans anticipate concrete financial benefits from the recently approved tax reform law, particularly in the form of larger paychecks. In fact, according to an analysis by the Tax Policy Center, around 80 percent of taxpayers will see a tax cut in 2018, for an average of $1,600,” noted Raghavan Mayur, president of TechnoMetrica, IBD's polling partner.

The Breakdown
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’s the same as last month. Six groups improved on the index, while 15 declined. Last month, it was the opposite: Fifteen groups improved on the index, while six declined.

On the Economic Outlook component, 15 of the 21 groups that IBD/TIPP tracks scored in optimistic territory. But all of the outlook scores declined from the previous month.

On the Personal Financial component, all 21 groups IBD/TIPP tracks remained in optimistic territory. Ten groups increased while 11 declined.

On the Federal Policies component, 12 of the 21 demographic groups tracked were above 50. Fourteen groups advanced on the component, six declined and one stayed the same.

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.

For more information, go to www.tipponline.com. To license the IBD/TIPP Poll, please contact: [email protected].

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GMK Communications for IBD
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