The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, today revealed that consumer confidence is up for the third consecutive month. After climbing 2.2% in January and 3.6% in February, the index rose another 6.7% in March, moving from 51.9 last month to 55.4 this month. The index is now at its highest point since February 2020, when it had a 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 1,280 adults from February 24 to February 27. 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 dipped slightly (2.2%) after February’s dramatic 41.8% increase. March’s reading of 61.7 is the second highest since June 2009; February’s 63.1 was the top reading in more than a decade. All of the index components remain in positive territory for the second consecutive month — the first time this has happened since 2009, in the first year of Barack Obama’s presidency.
The National Outlook Index rose in March. This month’s reading of 54.9 was up 5.0%, building on February’s 21.3% increase. It has now reached its highest reading since January 2004. Notably, the Direction of the Country component continues to rise. After climbing 42.9% in February, it rose another 15.6% in March, yielding its first reading (52.7) in positive territory since August 2018 and highest reading since January 2004. The only index component in negative territory is Morals and Ethics, which at 44.0 is the highest reading since November 2004.
Still, financial related stress increased. This month stress grew by 0.2%, moving from 61.6 in February to 61.7 in March. 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 has been above 50.0 since March 2020.
“It’s clear that consumers are still experiencing financial hardship as a result of the pandemic, but March’s numbers are encouraging,” said Ed Carson, IBD’s news editor. “The indexes reflect readings near or better than pre-COVID levels. Biden is now settling into office, and the stimulus bill has passed in the House. As more vaccines are distributed, there is a sense that a return to normalcy could be on the horizon.”
The flagship IBD/TIPP Economic Optimism Index has three key components. This month, all 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 7.5%, moving from 49.5 in February to 53.2 in March. This shift brings the component back into positive territory for the first time since October 2020.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months rose 2.7% this month, moving from 56.5 in February to 58.0 in March.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, gained the most ground for the second consecutive month. It moved from 49.7 last month to 54.9 this month — a 10.5% increase, returning the component to positive territory.
“Americans are ready to put the pandemic behind them, with 60% reporting that it has taken a toll on their mental health,” said Raghavan Mayur, president of TechnoMetrica, who directed the poll. “The majority of respondents are also struggling to pay bills. Similarly, they are worried about retirement savings. But, the data show that people are starting to believe that their prospects may improve in the coming months, particularly as vaccinations increase. Of poll respondents, 28% have already had their first shot, and another 46% are waiting, though some vaccine hesitancy remains among certain demographics– notably Blacks, women, southerners, people who live in rural parts of the country, as well as Republicans.”
Economic Optimism Index Breakdown
This month, 16 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. 11 in February, eight in January, nine in December, eight in November and 15 in October. Nineteen groups rose this month vs. 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, 12 of 21 groups that IBD/TIPP tracks scored in optimistic territory vs. 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 18 groups vs. 15 in February, 14 in January, 10 in December, four in November and all 21 in October.
For the Personal Financial component, 17 groups IBD/TIPP tracks were in optimistic territory for a second straight month vs. 19 in January and December, 18 in November and 20 in October. Fifteen groups rose in March vs. 10 in February, 12 in January, 13 in December, three in November and 19 in October.
For the Federal Policies component, 14 of the 21 demographic groups tracked were above 50.0, up from nine in February, seven in January and five in December and November. In October, 10 groups were above 50.0. Twenty groups rose in March vs. 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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