Economic Optimism Dips Slightly but Remains in Positive Territory According to Latest IBD/TIPP Poll

LOS ANGELES, April 04, 2017 -- The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, has tumbled from 12-year highs back to pre-election levels. Additionally, two of the IBD/TIPP Poll's three major subindexes, optimism about the six-month economic outlook and satisfaction with government economic policies, have fallen below their pre-election levels. The third subindex, a gauge of optimism about personal financial prospects, remains moderately above its pre-Trump level.

Overall, the IBD/TIPP Economic Optimism Index is 0.5 points above its 12-month average of 51.2, 7.3 points above its reading of 44.4 in December 2007 when the economy entered the last recession, and 2.5 points above its all-time average of 49.2. The index declined 3.6 points, or 6.5%, in April, posting a reading of 51.7 vs. 55.3 in March 2017. Index readings above 50 indicate optimism; below 50 indicate pessimism.

The IBD/TIPP Economic Optimism Index has a good 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 904 adults from March 24 to March 30 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. This month’s analysis can be found here.

“We found that even though Americans view President Trump as largely ineffective in his first three months, the market continues to perform well, which has kept the index in positive territory,” said Terry Jones, Commentary Editor of Investor’s Business Daily. “This begs us to ask if we are headed towards a correction as confidence in Trump falls.”

The IBD/TIPP Economic Optimism Index has three key components. This month, all three of the index components declined.

• The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, declined 2.5 points, or 4.7%, to 51.1. For comparison, this sub-index was 32.1 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, decreased 1.3 points, or 2.1%, to 61.3, though it remains well within positive territory.
   
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, dropped the most amongst the three components. It fell 7.0 points, or 14.1%, to 42.6.

“Despite a little weakness in confidence compared to previous months, our index continues to be in optimistic territory. Americans are optimistic that President Donald Trump will deliver on his promises to cut taxes and lessen regulations which are likely to boost U.S. employment and grow the economy. Fifty-two percent believe that the economy is improving,” said Raghavan Mayur, president of TechnoMetrica, IBD's polling partner. 

The Breakdown
This month, 11 of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index. Three groups improved on the index, while 18 declined. This is the sharpest change since Trump took office in January, when 20 of the 21 demographic groups -- such as age, income, race and party preference -- tracked by the IBD/TIPP Poll were above 50 on the Economic Optimism Index and 15 groups expressed increased optimism.

On the Economic Outlook component, 10 of the 21 groups that IBD/TIPP tracks scored in optimistic territory. Four groups improved on the component, while 16 declined. One did not change.

On the Personal Financial component, 21 groups IBD/TIPP tracks scored in optimistic territory. Six groups increased, while fifteen declined.

On the Federal Policies component, only one of the 21 demographic groups tracked was above 50. Three groups advanced on the component and eighteen declined.

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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For Editorial Contact:
Marisa Lam
GMK Communications for IBD
[email protected]
650.544.3350