The Pulse

Election Day Blues Hit As Economic Optimism Dips Again

Economic optimism, Presidential Leadership and National Outlook indexes slide for the second consecutive month as Financial Related Stress improves

IBD/TIPP’s latest Economic Optimism Index surveyed 1,359 adults November 2-November 4. The poll was conducted online using TechnoMetrica’s network of 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.

LOS ANGELES–(BUSINESS WIRE)–Coinciding with election day, the monthly IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, dropped for the second straight month, moving from 41.6 in October to 40.4 in November– a change of 2.9%. This kept the index in negative territory for the 15th consecutive month. A reading above 50.0 signals optimism and below 50.0 indicates pessimism on IBD/TIPP indexes.

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.

Presidential Leadership, National Outlook & Financial Related Stress Index

The Presidential Leadership Index dipped 0.4% in November. Its overall reading of 44.9 was down from last month’s 45.1. Job Approval was the only component to rise this month, moving up 0.4% to 45.5 from 45.3 in October. All components remained in negative territory in November.

The National Outlook Index also declined in November, slipping in all six components that IBD/TIPP tracks. Its overall reading of 39.6 fell 4.3% from October’s 41.4. With all components situated in negative territory, the Standing in the World component experienced the most movement, dropping from 41.4 in October to 37.4 in November– a 9.7% change.

Interestingly, the Financial Related Stress Index improved in November. The index moved from 69.5 last month to 67.8 this month– a 2.4% change. A reading over 50.0 on this index equals more financial stress while a reading below 50.0 indicates consumers feel less stress. The index was last below 50.0 in February 2020 (48.1).

“We saw a few points of very modest improvement across this month’s indexes, most notably in the Financial Related Stress Index and in the Personal Financial Outlook, but economic pessimism continues to rule the day,” said Ed Carson, IBD’s news editor. “The big question is how will voters’ views on the economy affect what they do at the ballot box today?”

Key Components Of The IBD/TIPP Economic Optimism Index

The flagship IBD/TIPP Economic Optimism Index has three key components. In November, two of the three declined.

  • The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, fell 3.1% in November. The component’s reading of 34.3 was down from October’s 35.4.
  • The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, was the lone component to rise. It moved from 48.2 last month to 48.4 this month– a 0.4% increase.
  • Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, dropped the most, shifting from 41.2 in October to 38.6 in November– a 6.3% change.

“The economy ranks as the top issue on voters’ minds by a very large margin,” said Raghavan Mayur, president of TechnoMetrica, who directed the poll. “Concerns about inflation and a possible recession are warranted as the Fed continues to hike interest rates, which are now at their highest level since January 2008 in the thick of the last recession. With the holidays just around the corner, expect significant shifts in spending across the board. Consumers will spend less on everything from gifts to travel to food.”

Economic Optimism Index Breakdown

Concerns about inflation and a possible recession are warranted as the Fed continues to hike interest rates, which are now at their highest level since January 2008 in the thick of the last recession...

This month, three 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 vs. six in October and September, just one in August, three in July, one in June, four in May and seven in April. Nine groups rose vs. five in October, all 21 in September, 11 in August, 10 in July, three in June, one in May and 20 in April.

For the Six-Month Economic Outlook component, just one of the 21 groups that IBD/TIPP tracks scored in optimistic territory, the same as in October. That’s vs. three in September, none in June to August, just one in May and three in April. Optimism over the economy’s six-month outlook rose for 11 groups vs. five in October, all 21 in September, 10 in August, 16 in July, five in June, zero in May and 20 in April.

For the Personal Financial component, seven groups IBD/TIPP tracks were in optimistic territory vs. nine in October, 13 in September, seven in August and July, six in June, nine in May and 14 in April. Twelve groups rose vs. three in October, all 21 in September, 11 in August, nine in July, two in June, six in May and 19 in April.

For the Federal Policies component, three of the 21 demographic groups tracked were above 50.0 vs. five in October, four in September, one in August, two in July, one in June, four in May and six in April. Six groups rose in November vs. nine in October, all 21 in September, five in July, four in June, one in May and 18 in April.




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.
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