Economic Optimism Index Falls across Every Category in December: IBD/TIPP Poll

LOS ANGELES, Dec. 06, 2017 (GLOBE NEWSWIRE) -- The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, decreased across all measures in December. The overall Economic Optimism reading dropped to 51.9, a decline of 3.2 percent. Nevertheless, the index maintains its longest stretch in positive territory in more than a decade.

In addition to the Economic Optimism Index, IBD/TIPP surveyed respondents on key political issues for the Presidential Leadership Index and the National Outlook Index (see separate story here for details). After rising nine percent last month, the separate Presidential Leadership Index fell to 38.5, a 3.3 percent drop, remaining well below its long-term average of 49.4. The National Outlook Index also declined across all components in December, decreasing by 2.1 percent overall, with an index reading of 42.0. For all of the IBD/TIPP indexes, a reading below 50 indicates pessimism while a reading above 50 signals optimism.

The IBD/TIPP Economic Optimism Index has established a strong 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 901 adults from November 27 to December 4 using live interviewers and both cell phone and landline numbers. The margin of error is +/-3.3 percentage points.

“The roller coaster continues for the Trump administration, signalling that Americans feel some instability. As soon as the President appears to make headway, as the November indexes indicated, the numbers trend south again,” said Terry Jones, IBD's Commentary Editor. “It’s worth noting that the tax reform package President Trump championed and is nearing passage hasn’t led to a jump in optimism, including the personal outlook category. Confidence in federal policies is also falling.”

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

  • The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, returned to negative territory. This component declined 3.9 percent in December. At 49.8, the component still remains well 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, decreased by 4.1 percent, falling from 61.6 to 59.1.
  • Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, declined by 1.3 percent to 46.7, down from 47.3.

“Though our economic confidence index weakened slightly in December, it is still in its optimism territory. Americans are encouraged by the positive signs in the economy such as strong GDP growth, a robust job market, record gains in the stock market, and stable energy prices,” noted Raghavan Mayur, president of TechnoMetrica, IBD's polling partner. “However, Special Counsel Mueller’s investigation is an existential threat to the presidency and therefore the economy. A protracted inquiry accompanied by jarring impeachment talk is likely to fuel ongoing uncertainty in the equity markets and potentially serve as a catalyst that could trigger a bear market -- eclipsing the potential fruits of a tax reform that is supposed to help the economy and boost confidence.”

The Breakdown
This month, 15 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 down slightly from 16 of 21 last month. Seven groups improved on the index, while 13 declined and one stayed the same.

On the Economic Outlook component, nine of the 21 groups that IBD/TIPP tracks scored in optimistic territory. Five groups improved on the component while 16 declined.

On the Personal Financial component, 19 of the 21 groups IBD/TIPP tracks scored in optimistic territory. Three groups increased, 16 groups decreased, and two remained the same.

On the Federal Policies component, four of the 21 demographic groups tracked were above 50. Ten groups advanced on the component and 11 declined.

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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