The IBD/TIPP
Economic Optimism Index, a leading national poll on consumer
confidence, fell 9.2 percent overall in June as every component on the
index slid. Its 53.2 reading, which dropped from 58.6 last month,
remains in positive territory however, continuing its record run of 33
consecutive months above 50. 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 906 adults from May 30-June 6,
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. Reversing last month’s trend of all components of
the indexes moving upward in May, June’s Presidential Leadership and
National Outlook indexes fell across every component, and the Financial
Related Stress Index indicated that more consumers feel more stress.
The Presidential Leadership Index declined 3.2 percent to 45.5, while
the National Outlook Index declined 5.1 percent, moving from 48.8 in May
to 46.3 in June. The Financial Related Stress Index ended a run of three
consecutive months of declining stress, this month rising 5.4 percent to
51.0. A reading below 50 on this index indicates that consumers feel
less financial stress while a reading above 50 equals more financial
stress.
“June is another swing month in the Trump presidency,” said Terry Jones,
IBD’s Commentary Editor. “After May’s Economic Optimism Index hit a
15-year high, consumers’ nerves have been rattled by the lingering trade
war with China and trade tensions with Mexico. People worry about what
the tariffs and trade barriers might mean for prices and for jobs. The
end of the dispute with Mexico might help ease some of those concerns.”
The flagship IBD/TIPP Economic Optimism Index has three key components.
This month, all three decreased.
-
The Six-Month Economic Outlook, a measure of how consumers feel
about the economy’s prospects in the next six months, decreased the
most of all components. It fell by 14.5 percent, returning to negative
territory after last month’s spike. June’s reading of 47.7, down from
55.8 in May, is its lowest reading since February. However, it does
remain 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, decreased 5.1
percent. Its reading moved from 64.4 last month to 61.1 this month,
which is also its lowest reading since February. -
Confidence in Federal Economic Policies, a proprietary IBD/TIPP
measure of views on how government economic policies are working,
dropped 8.8 percent to reach its lowest level since February as well.
The component fell from 55.6 in May to 50.7 in June.
“Despite the large drop in sentiment, our Economic Optimism Index is in
the positive zone. The ongoing trade war with China, recent stock market
correction and a weak jobs report are contributing factors. A majority
of Americans feel that the trade war with China is hurting the U.S.
economy, but they are hopeful a deal will be reached soon. This month’s
large decline in the economic outlook component is concerning because it
historically tends to alert a significant slowdown in the economy. On a
positive note, 52 percent think the economy is improving,” said Raghavan
Mayur, president of TechnoMetrica Market Intelligence, IBD’s polling
partner.
The Breakdown
This month, 15 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 down from 19 in May and equal to
April’s level. All 21 groups fell during the month, reversing May’s
across-the-board rise. In April, 13 rose.
On the Economic Outlook component, just four of the 21 groups that
IBD/TIPP tracks scored in optimistic territory, versus 18 in May, eight
in April, 10 in March and just two in February.
On the Personal Financial component, all 21 groups IBD/TIPP tracks
remained in optimistic territory. Just three groups rose while 18
declined. Notably, the index stood at 61.1 in June, down from May’s 64.4
and below the all-time high of 66.7 in October.
On the Federal Policies component, 12 of the 21 demographic groups
tracked were above 50, down from 17 in May but still up from 11 in
April. This month all 21 groups fell compared to May when 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.
For more information, go to www.tipponline.com.
To license the IBD/TIPP Poll, please contact: IBDlicensing@investors.com.
About IBD
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help investors make smarter decisions. Its stock lists have outperformed
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election cycles, was one of only two national polls to accurately
predict the outcome of the 2016 Presidential Election. IBD offers a
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