The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, today revealed that consumer confidence is up for the fourth consecutive month. After hitting 55.4 last month, the index rose another 1.8% to 56.4, moving closer to the February 2020 pre-COVID reading of 59.8. 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.
IBD/TIPP surveyed 1,436 adults from March 31 to April 3. The poll was conducted online using TechnoMetrica’s network of online panels to provide the sample.
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.
This month, the Presidential Leadership Index declined 2.4%, after last month’s 2.2% slide. President Biden’s current 60.2 reading remains higher than any month of the Trump presidency. Additionally, all of the index components are in positive territory for the third consecutive month.
The National Outlook Index rose modestly in March. This month’s reading of 55.0 was up 0.2%, claiming the spot for the highest reading since January 2004. Notably, the Direction of the Country component continued to increase, up another 2.7% to 54.1 after rising 42.9% in February and 15.6% in March. The Morals and Ethics component also climbed 3.0% to 45.3, making it the new highest reading since November 2004’s 48.0. Yet, the Quality of Life component declined 0.3% to 59.6 and the Standing in the World component fell 2.3% to 54.5.
Of all of the indexes, the Financial Related Stress index experienced the greatest change. In April, stress declined by 7.9%, moving from 61.7 last month to 56.8 this month — its best reading since March 2020’s 51.3. 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).
“This month’s indexes, more than any since the start of the pandemic, indicate that consumers have hope that their financial lives will improve in the coming months,” said Ed Carson, IBD’s news editor. “With stimulus checks in consumers’ hands, ‘Now Hiring’ signs appearing in more businesses, and nearly half of poll respondents receiving at least their first vaccine, there is cautious optimism for their future economic prospects.”
The flagship IBD/TIPP Economic Optimism Index has three key components. This month, two of the three increased.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, increased by another 5.1%, moving from 49.5 in February to 53.2 in March, and now to 55.9 in April.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, declined by 1.2%, moving from 58.0 last month to 57.3 this month.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, increased from 54.9 in March to 56.0 in April — a 2.0% gain.
“The indexes show a return or near return to pre-pandemic levels across multiple components,” said Raghavan Mayur, president of TechnoMetrica, who directed the poll. “Although 41% of Americans still believe we are in a recession, another 45% feel that the economy is improving. We are in the twilight before the sunrise; the economy is likely to take off in the third quarter as we return to normalcy with herd immunity and put the pandemic behind us.”
Economic Optimism Index Breakdown
This month, 17 of 21 demographic groups — such as age, income, race and party preference — that IBD/TIPP tracks are above 50.0, in positive territory, on the Economic Optimism Index. That’s vs. 16 in March, 11 in February, eight in January, nine in December, eight in November and 15 in October. Fourteen groups rose this month vs. 19 in March, 13 in February, 12 in January, nine in December, just three in November and all 21 in October.
For the Six-Month Economic Outlook component, 15 of 21 groups that IBD/TIPP tracks scored in optimistic territory vs. 12 in March, nine in February, seven in January, seven in December, eight in November and 13 in October. Optimism over the economy’s six-month outlook rose among 15 groups, vs. 18 in March, 15 in February, 14 in January, 10 in December, four in November and all 21 in October.
For the Personal Financial component, 19 groups IBD/TIPP tracks were in optimistic territory vs. 17 in March and February, 19 in January and December, 18 in November and 20 in October. Nine groups rose in March vs. 15 in March, 10 in February, 12 in January, 13 in December, three in November and 19 in October.
For the Federal Policies component, 16 of the 21 demographic groups tracked were above 50.0, up from 14 in March, nine in February, seven in January and five in December and November. In October, 10 groups were above 50.0. Twelve groups rose vs. 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 1,200 adults conducted using a network of online panels. The national poll is generally conducted in the first week of the month.
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