Latest IBD/TIPP Poll Shows July Swoon as Economic Optimism Index Slips
The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, dropped 3.7% in July, moving from 56.4 in June to 54.3 this month. However, the July reading still remains in positive territory ? now for the seventh consecutive month. For the IBD/TIPP indexes, a reading above 50.0 signals optimism and below 50.0 indicates pessimism.
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.
For the July index, IBD/TIPP surveyed 1,424 adults from June 30 to July 2. The poll was conducted online using TechnoMetrica's network of online panels to provide the sample. IBD/TIPP also surveyed respondents on key political issues for the separate Presidential Leadership Index and National Outlook Index as well as the Financial Related Stress Index.
This month, the Presidential Leadership Index took a significant hit, falling 8.0% from 61.2 in June to 56.3 in July. This marks the lowest reading of the Biden presidency, yet remains above any reading of the Trump presidency, which topped out at 49.7 in April 2020. Each component of the Presidential Leadership Index declined, with the Leadership component falling the most at 9.1%, moving from 58.3 in June to 53.0 this month
After reaching its highest mark since January 2004 last month, the National Outlook Index declined 5.3% in July, moving from 55.2 to 52.3. All six index components registered decreases this month. The Standing in the World (down 7.2% to 50.5) and Direction of the Country (down 7.7% to 50.5) components now hover just above the 50.0 mark for positivity.
The Financial Related Stress index also continued to trend negative. The index rose by another 2.3%, from 59.0 to 61.9. A reading over 50.0 equals more financial stress while a reading below 50.0 on this index would indicate consumers feel less stress. This index was last below 50.0 in February 2020 (48.1).
"Although Biden has enjoyed strong marks from Americans, particularly registered voters, in the opening months of his term, it is not surprising to see readings settle at this point," said Ed Carson, IBD's news editor. "We are still facing a number of serious issues in the country, for which there is no overnight fix. When it comes to the economy, 40% of people still believe we are in a recession, and 78% are concerned about inflation."
The flagship IBD/TIPP Economic Optimism Index has three key components. This month, two of the three declined.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy's prospects in the next six months, fell by 8.6%, moving from 55.6 in June to 50.8.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, was the only component to rise. It moved from 57.3 last month to 59.7 this month ? an increase of 4.2%. This is the highest reading since March 2020's 61.2
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, declined by 7.1%, dropping from 56.4 in June to 52.4 in July.
"The July swoon is here," said Raghavan Mayur, president of TechnoMetrica, who directed the poll. "But even though index components are down, the job market is strong. People can see that there is the potential for them to improve their personal situation, which will help bring greater stability and may ease inflationary concerns in the coming months."
Economic Optimism Index Breakdown
This month, 14 of 21 demographic groups ? such as age, income, race and party preference ? that IBD/TIPP tracks were above 50.0, in positive territory, on the Economic Optimism Index. That's vs. 18 in June, 17 in May and April, 16 in March, 11 in February and eight in January. Just six groups rose this month vs. 15 in June, seven in May, 14 in April, 19 in March, 13 in February and 12 in January.
For the Six-Month Economic Outlook component, nine of 21 groups that IBD/TIPP tracks scored in optimistic territory vs. 17 in June, 13 in May, 15 in April, 12 in March, nine in February and seven in January. Optimism over the economy's six-month outlook rose among just one group in July vs. 15 groups in June. nine in May, 15 in April, 18 in March, 15 in February and 14 in January.
For the Personal Financial component, 19 groups IBD/TIPP tracks were in optimistic territory vs. 18 in June, 13 in May, 19 in April, 17 in March and February and 19 in January. Fifteen groups rose vs. 10 in June, nine in May and April, 15 in March, 10 in February and 12 in January.
For the Federal Policies component, 12 of the 21 demographic groups tracked were above 50.0, vs. 17 in June, 13 in May, 16 in April, 14 in March, nine in February and seven in January. Just three groups rose vs. 18 in June, four in May, 12 in April, 20 in March, 16 in February and 13 in January.
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 about 1,300 adults conducted using a network of online panels. The national poll is generally conducted in the first week of the month.
For more information, go to www.tipponline.com. To license the IBD/TIPP Poll, please contact [email protected].
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