The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, rose 10.3% in December, ending a five-month decline. The reading of 48.4 is not enough to climb out of negative territory, however, as the index remains below 50.0 for the fourth consecutive month. 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.
For the December index, IBD/TIPP surveyed 1,301 adults from December 1-4. The poll was conducted online using TechnoMetrica’s network of online 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 rose in December. After last month’s 9.8% drop, the index regained some ground, moving from 46.0 in November to 49.6 in December — a 7.8% change that inches it closer to a positive reading. All components on the index increased, with Leadership (47.6) now as the only component remaining below 50.0.
Additionally, the National Outlook Index increased by 10.1%, moving from 42.7 in November to 47.0 in December. Four of six components rose by double digits, including the Quality of Life component, which returned to positive territory (54.7) after its 11.0% surge. The Standing in the World component climbed the most, however, at 12.5% for a reading of 44.9.
The Financial Related Stress Index improved as well, down 5.2% in December. It now sits at 65.1, down from 67.3 in November. A reading over 50.0 equals more financial stress while a reading below 50.0 on this index would indicate consumers feel less stress. The index was last below 50.0 in February 2020 (48.1).
“Although inflation is still a big concern for the majority of Americans — 84% according to our survey — financial stress is easing a bit and overall Quality of Life improved this month,” said Ed Carson, IBD’s news editor. “This signals that consumers are more positive about their prospects than they’ve been in recent months. With plenty of jobs available, and workers in the drivers’ seat, people are feeling alright about their personal finances, though you’re still not likely to see lavish spending this holiday season.”
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, rose by 10.9% to 42.8, up from 38.6.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months increased by 5.8%, moving from 51.9 in November to 54.9 in December. It remains the only index component in positive territory.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, rebounded from last month’s 9.3% drop. The index now sits at 47.5, up from 41.1 last month — a significant 15.6% gain.
“Americans are rebounding from November’s deep funk, but we’re not in the clear yet,” said Raghavan Mayur, president of TechnoMetrica, who directed the poll. “People continue to worry about inflation, high gas prices as well as the price of food. Factor in the Omicron variant that’s on the loose and there is still uncertainty about what will happen next.”
Economic Optimism Index Breakdown
This month, seven 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 up from just three in November but down from eight in September and October, 14 in August and July, 18 in June, 17 in May and April and 16 in March. Eighteen groups rose this month vs. three in November, six in October, just one in September and August, six in July, 15 in June, seven in May, 14 in April and 19 in March.
For the Six-Month Economic Outlook component, six of 21 groups that IBD/TIPP tracks scored in optimistic territory vs. two in November, four in October, five in September, eight in August, nine in July, 17 in June, 13 in May, 15 in April and 12 in March. Optimism over the economy’s six-month outlook rose in 18 groups vs. three in November, 11 in October, zero in September, 10 in August, just one in July, 15 in June, nine in May, 15 in April and 18 in March.
For the Personal Financial component, 15 groups IBD/TIPP tracks were in optimistic territory vs. 11 in November, 16 in September and October, 19 in August and July, 18 in June, 13 in May, 19 in April and 17 in March. Seventeen groups rose after three did in November and eight in October vs. three in August and September. Fifteen rose in July, 10 in June, nine in May and April and 15 in March.
For the Federal Policies component, eight of the 21 demographic groups tracked were above 50.0 vs. three in November, eight in October, nine in September, 10 in August, 12 in July, 17 in June, 13 in May, 16 in April and 14 in March. Eighteen groups rose vs. just four in November, three in October, two in September, 12 in August, three in July, 18 in June, four in May, 12 in April and 20 in March.
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 www.tipponline.com. To license the IBD/TIPP Poll, please contact IBDlicensing@investors.com.
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