Financial Stress Index reflects slightly more stress while National Outlook Index and Presidential Leadership Index show modest increasesThe latest measurement of investor sentiment from Investor’s Business Daily (IBD).
February 04, 2020 — LOS ANGELES–(BUSINESS WIRE)–The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, maintained its positivity in February, rising another 4.2% to 59.8. This is the highest reading for the Economic Optimism Index since it reached 60.6 in January 2004. Despite a slight decline on the Personal Financial Outlook component, the index maintained its record run in positive territory, remaining above 50.0 for 41 consecutive months. 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 January 23 – January 30, using live interviewers and both cell phone and landline numbers. The margin of error is +/-3.3 percentage points.
Economy Isolated From Political Turmoil?
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 rose slightly overall, from 46.5 to 47.3 — a 1.7% increase. All index components reflected modest increases.
- The National Outlook Index increased across every component except Quality of Life (down 1.1%) and Morals & Ethics (down 0.3%). Rising 1.6% overall, the index’s February reading of 49.8 is its highest in more than a decade when September 2009’s reading reached 50.5.
- The Financial Related Stress Index increased by 2.1% in February, but the reading of 48.1 remains below 50.0 for the second consecutive month. 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.
“American sentiment about the economy appears isolated from political turmoil,” said Terry Jones, IBD’s commentary editor. “Despite the impeachment trial and beginning of what could be a wild primary season, consumers are happy with market performance and have a sense of economic stability.”
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, showed strong positive momentum. After declining by 3.6% in January, this component rose 11.5% in February to reach 57.0. As such, it remained in positive territory for a third consecutive month and hit its highest mark in two years (February 2018’s reading was 57.5).
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, declined by 0.3% in February. It yielded a reading of 64.4 this month compared to 64.6 last month.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, increased 2.7%, moving from 56.4 in January to 57.9 in February.
“The economy continues to thrive and unemployment remains historically low,” said Raghavan Mayur, president of TechnoMetrica who directed the poll. “Americans’ economic confidence remains strong, as rising wages, low unemployment, a soaring stock market and reduced interest rates create a greater feeling of financial security. We anticipate that economic confidence will help consumer spending stay healthy in the months ahead.”
This month, 19 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’s one lower than January, the same as December, three higher than November and two higher than October and September. Sixteen groups rose overall this month, up from 11 in January, down from 19 in December, but up from 14 in November, 12 in October and three groups in September.
- On the Economic Outlook component, 16 of the 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 rose among all three political groups and among both investors and non-investors alike. But optimism among Independents, a key swing vote in upcoming elections, jumped sharply and remained above 50 for a third month in a row as the election season kicks off.
- On the Personal Financial component, all 21 groups IBD/TIPP tracks again remained in optimistic territory, as in December, November and October. That’s up from 19 in September. Ten groups rose, down from 17 in January, 14 in December and November and 12 in October. Of the three major political groupings, only Democrats increased. Twelve groups fell, up from four in January, eight in December, six in November and eight in October. In September, 18 fell, and 14 fell in August, the same as in July.
- On the Federal Policies component, 17 of the 21 demographic groups tracked were above 50, up from 16 in January. This month, 11 groups rose, compared to 19 in January, 18 in December, five in November and 15 in October.
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.
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