The Latest IBD/TIPP Poll Shows Rare 9.9% Drop in Economic Optimism as Coronavirus Spreads

Sponsored by Businesswire

The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, experienced a near double-digit decline (9.9%) in March, just one month after reaching its highest point in 16 years. On top of this month’s 9.9% overall drop, the index’s Six-Month Economic Outlook component fell by 16.1%. This is the largest percentage drop within a month since October 2013. Despite this and because the index had hit such a high in February 2020 (59.8), March still yielded a reading of 53.9, maintaining its record run in positive territory for the 42nd consecutive month. An index reading below 50.0 for the IBD/TIPP indexes 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 conducted its national telephone poll of 908 adults from February 20 – February 29, 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.

This month, the Presidential Leadership Index declined 6.6%, moving from 47.3 last month to 44.2 this month. All index components fell, with the Leadership component sliding the most, from 49.1 to 45.7, a 6.9% decrease.

The National Outlook Index also decreased across every component. Overall, the index’s March reading of 47.2 is down 5.2% from February when it reached its highest point in more than a decade. The March index is now at its lowest point in four months.

Additionally, the Financial Related Stress Index increased for the second consecutive month. It rose 6.7%, from 48.1 to 51.3. A reading below 50.0 on this index indicates that consumers feel less financial stress while a reading above 50.0 equals more financial stress.

“As Coronavirus spreads globally, the market has reacted in ways that are making consumers increasingly uneasy,” said Terry Jones, IBD’s commentary editor. “Rather than focus on the ups and downs of the Trump presidency, which have had a moderate impact on the indexes in the past, Americans are looking more at the big economic picture, independent of party or politics. There is a certain level of uncertainty as sectors, such as travel and tourism, take a hit heading into spring.”

The flagship IBD/TIPP Economic Optimism Index has three key components. This month, all 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 16.1% — its biggest drop in nearly seven years — and returned to negative territory. The component plunged from 57.0 in February — its highest mark in two years — to 47.8 in March.
The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, declined for the second consecutive month, although it remained in positive territory. It yielded a reading of 61.2 this month compared to 64.4 last month — down 5%.
Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, fell 9.2% in March, after three consecutive months of increasingly positive sentiment. This month, the component yielded a reading of 52.6, down from 57.9 last month.

“While the majority of Americans are not overly concerned about coronavirus, most believe it will hurt the economy to some degree,” said Raghavan Mayur, president of TechnoMetrica who directed the poll. “We are not seeing panic however. Economic optimism remains positive. The fact that the index has been above 50 for 42 straight months is extraordinary. The job market is strong, and interest rates remain low.”

The Breakdown

This month, 15 of 21 demographic groups — such as age, income, race and party preference — that IBD/TIPP tracks were at or above 50, in positive territory, on the Economic Optimism Index. That is four fewer than February, five below January and four less than December. All 21 groups fell this month vs. 16 rising in February, 11 in January and 19 in December.

On the Six-Month Economic Outlook component, seven of 21 groups that IBD/TIPP tracks scored in optimistic territory, versus 12 in January, 15 in December, six in November, one in October, three in September and 11 in August. Optimism over the economy’s six-month outlook fell among all three political groups and among both investors and non-investors alike. Optimism among Independents, a key swing vote in upcoming elections, tumbled 14.8 points to 42.7 as the election season kicks into high gear.

On the Personal Financial component, all 21 groups IBD/TIPP tracked remained in optimistic territory, the same as in February, January, December, November and October. Seventeen groups fell vs. 12 in February, four in January, eight in December, six in November and eight in October.

On the Federal Policies component, 12 of the 21 demographic groups tracked were above 50, down from 17 in February and 16 in January. This month, just one group rose vs.11 in February, 19 in January, 18 in December, five in November and 15 in October.

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.

For more information, go to www.tipponline.com. To license the IBD/TIPP Poll, please contact: IBDlicensing@investors.com.

About IBD

Investor’s Business Daily (IBD) is a leading financial news and research organization recognized for proprietary stock screens, comparative performance ratings and a record of identifying stock leaders as they emerge. The company takes a data-first approach to investing, educating investors about how to invest successfully using tested methods and sound research. IBD has honed its approach over the last 50 years to help investors make smarter decisions. Its stock lists have outperformed the S&P, and its presidential poll, the most accurate over the past four election cycles, was one of only two national polls to accurately predict the outcome of the 2016 Presidential Election. IBD offers a number of interactive stock research tools and provides information for investors of every level. To learn more about all that IBD has available, please visit www.investors.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200303005664/en/