The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, increased 6.4 percent in July, regaining some ground after last month’s 9.2 percent slide. July’s 56.6 reading also ensured that the index continues its record run in positive territory, now reaching 34 consecutive months. An index reading below 50 for the IBD/TIPP indexes indicates pessimism while above 50 signals optimism.
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 900 adults from June 20 – June 27, 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 key political issues for the separate Presidential Leadership Index and National Outlook Index, as well as the Financial Related Stress Index. In another month of across-the-board reversals, all components of all of the indexes increased.
The Presidential Leadership Index rose 3.7 percent, from 45.5 in June to 47.2 in July. That is its highest point since February 2017, shortly after President Trump took office. President Trump’s Favorability rating of 47.0 is also its best since February 2017 while the Job Approval reading of 46.8 is the strongest since January 2017.
In July, the National Outlook Index increased 4.1 percent, from 46.3 to 48.2. The Financial Related Stress Index also reflected more positive sentiment as stress decreased from 51.0 to 48.9 — a 4.1 percent drop. A reading below 50 on this index indicates that consumers feel less financial stress while a reading above 50 equals more financial stress.
“One thing that has been consistent throughout the Trump presidency is that consumer sentiment across the various indexes continues to swing like a pendulum from month-to-month,” said Terry Jones, IBD’s Commentary Editor. “For example, May’s Economic Optimism Index hit a 15-year high, followed by a sizeable drop in June, only to rally again in July. Yet, throughout all of the ripples we study month-to-month, the economy continues to perform well.”
The flagship IBD/TIPP Economic Optimism Index has three key components. This month, all three components increased.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, rose 8.2 percent after last month’s 14.5 percent drop. This increase was enough to bring the component back into positive territory, with a reading of 51.6. The Six-Month Economic Outlook also remained substantially above the 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, increased 3.3 percent. Its reading moved from 61.1 last month to 63.1 this month.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, rose 8.5 percent, moving from 50.7 in June to 55.0 in July.
“Americans’ economic confidence rebounded in July after a significant drop in June. Fifty-seven percent think that the economy is improving. Nearly one half give President Trump high grades for his handling of the economy,” said Raghavan Mayur, president of TechnoMetrica Market Intelligence, IBD’s polling partner.
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 is up from 15 in June and equal to May’s level. All 21 groups rose during the month, reversing June’s across-the-board decline. In May, all rose.
On the Economic Outlook component, 13 of the 21 groups that IBD/TIPP tracks scored in optimistic territory, versus just four in June but down from 18 in May.
On the Personal Financial component, all 21 groups IBD/TIPP tracks remained in optimistic territory. Seventeen groups rose, while just four fell. In June, just three groups rose while 18 declined. Notably, the index stood at 63.1 in July, up from 61.1 in June, but down from May’s 64.4 and below the all-time high of 66.7 in October.
On the Federal Policies component, 16 of the 21 demographic groups tracked were above 50, up from 12 in June, but down from 17 in May. In April, 11 were above 50. In July, 19 of the 21 groups rose, after all of them fell in June. In May, 18 groups rose and three fell.
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.
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