Economic Optimism Is on the Rise, According to the Latest IBD/TIPP Poll
The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, today showed some positive momentum. After two months of decline, the September index rose to 43.2, a 7.2% change from August's reading of 40.3. This is also the highest mark for the index since April (47.4). Still, the index has been in negative territory for 25 consecutive months. A reading above 50.0 signals optimism and below 50.0 indicates pessimism on IBD/TIPP indexes.
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 September index, IBD/TIPP surveyed 1,351 adults from August 30-September 1. The poll was conducted online using TechnoMetrica's network of 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.
The Presidential Leadership Index was up across the board, with its overall reading climbing 5.7% over last month. September rose to 44.3 vs. August's 41.9. Notably, Biden's Favorability reading increased the most, from 43.3 last month to 46.3 this month (+6.9%). Additionally, the Job Approval component improved to 45.3, up from 42.6, a 6.3% change. Yet, all index components remained in negative territory for the fifth consecutive month.
The National Outlook Index rose across all components for September. The overall index reading was up 7.7%, moving from 37.9 in August to 40.8 in September. The Quality of Life component returned to positive territory for the first time since May (50.1), climbing from 47.8 to 51.1 (+6.9%) while the Morals & Ethics component was the biggest mover, up 13.1% from 27.4 in August to 31.0 in September. Standing in the World also improved significantly. After experiencing the index's largest drop last month, it rose from 35.2 to 38.4, a 9.1% change.
The Financial-Related Stress Index increased for the third consecutive month in September, however, moving from August's reading of 67.6 to this month's 68.1, a 0.7% change. This is the highest reading on this index since October 2022 (69.5). On this index, a reading over 50.0 equals more financial stress while a reading below 50.0 indicates consumers feel less stress. The index was last below 50.0 prior to the pandemic in February 2020 (48.1).
"The pre-COVID days of record-setting economic optimism seem like a distant memory, but the fact that we've been able to stave off a recession is significant. Now we are starting to see some numbers inch up," said Ed Carson, IBD's news editor. "The Personal Financial Outlook, for example, has returned to positive territory with its highest reading since April. Whether the numbers continue to climb is the bigger question ? especially leading up to the election."
The flagship IBD/TIPP Economic Optimism Index has three key components. In September, all three rose.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy's prospects in the next six months, climbed from 35.2 in August to 38.3 in September, an 8.8% change.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, climbed 8.4% from its previous 48.7 reading to 52.8 this month. This marks the index's return to positive territory after spending the past three months in neutral-to-negative territory. It is also the highest reading since April (55.3).
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, improved from August's 37.1 to September's 38.6, a 4.0% change.
"The Fed discussed one more potential rate hike by the end of the year, but its view of the economy was not all doom and gloom," said Raghavan Mayur, president of TechnoMetrica, who directed the poll. "This month's poll results suggest improvements in consumer sentiment, but stresses still abound. It remains to be seen if September's indexes signal a true shift or just a momentary blip towards positivity."
Economic Optimism Index Breakdown
This month, three 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. one in August, three in July, two in June, six in May, 10 in April, eight in March, six in February and three in January. Fifteen groups rose vs. six in August, nine in June and July, zero in May, 13 in April, 12 in March, 13 in February and eight in January.
For the Six-Month Economic Outlook component, three of the 21 groups that IBD/TIPP tracks scored in optimistic territory, after zero for three straight months. That's vs. one in May, seven in March and April, four in February and zero in January. Optimism over the economy's six-month outlook rose for 14 groups vs. nine in August, 14 in July, 11 in June, one in May, 11 in March and April, 13 in February and nine in January.
For the Personal Financial component, 14 groups IBD/TIPP tracks were in optimistic territory vs. eight in August, 10 in July, 11 in June, nine in May, 13 in April, 12 in March and 10 in January and February. Nineteen groups rose after eight did in July and August vs. one in June, two in May, 14 in April, 16 in March, 15 in February and nine in January.
For the Federal Policies component, four of the 21 demographic groups were above 50.0 vs. one in August, two in July, one in June, five in May, nine in April, eight in March, four in February and three in January. Ten groups rose vs. five in August, 10 in July, eight in June, three in May, 12 in April, 10 in March, 14 in February and 11 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 https://tippinsights.com. To license the IBD/TIPP Poll, please email [email protected].
About IBD
Investor's Business Daily (IBD) is the leader in stock research and education. For over 35 years, IBD has helped countless investors around the world make more money in the market and achieve their financial goals.
Founded with the mission of democratizing stock investing, IBD provides its customers access to the same type of research Wall Street uses to make decisions. All of IBD's products and content are based on a time-tested investing methodology, which uses fundamental and technical analysis to identify leading stocks before their big price increases.
IBD helps its customers succeed in the market with its unparalleled stock research including market-beating stock lists, proprietary stock ratings and powerful investing tools that help them make more profitable trading decisions. In addition, IBD provides customers with world-class investing education that includes product coaching, interactive webinars, live and virtual workshops, videos, online courses and more.
IBD joined the Dow Jones and News Corp family of companies in May 2021. IBD reaches investors around the world via its main website, www.investors.com, its portfolio of digital products (IBD Digital, MarketSmith, Leaderboard, SwingTrader and IBD Live), mobile apps, a weekly print edition, social media and more. To learn more about all that IBD has available, please visit www.investors.com.
© 2023 Investor's Business Daily, LLC. All rights reserved. Investor's Business Daily, IBD, Leaderboard and IBD Live are registered trademarks of Investor's Business Daily, LLC. MarketSmith is a registered trademark of O'Neil Capital Management Inc.
News published on and distributed by:
