Nearly 28 million workers have lost their jobs in the past six weeks, but the IBD/TIPP Economic Optimism Index has recovered to only slightly pessimistic territory. While the six-month economic outlook remains grim, a great month for the Dow Jones, stimulus checks, federal aid to business and state reopening plans are keeping a recession from turning to depression, the May IBD/TIPP Poll suggests.
The overall Economic Optimism Index rose 1.9 points to 49.7, just below the 50 neutral level. In April, the index slid into pessimistic territory for the first time since the fall of 2016, after hitting 16-year high 59.8 at the end of January.
The six-month economic outlook index rose 4.3 points to 42.3, rebounding after it hit the lowest level since October 2011.
The outlook for personal finances bounced back from its biggest monthly drop on record as the Dow Jones scored its biggest monthly gain since 1987.
The $2 trillion coronavirus rescue package has surely helped. The legislation included a $600 boost to weekly unemployment benefits, $350 billion in emergency loans and grants for small business, and up to $1,200 per American adult and $500 per child, with eligibility based on income. Since then, Congress added another $250 billion to Paycheck Protection Program support for small business.
Meanwhile, a separate IBD/TIPP index of financial stress eased 5.8 points to 64.0, after hitting the highest level since December 2008 in April. Readings above 50 indicate more stress.
U.S. Economic Optimism Index Components
The IBD/TIPP Economic Optimism Index is a composite of three major subindexes. They track views of near-term prospects for the U.S. economy, the outlook for personal finances, and views of how well government economic policies are working.
The six-month outlook for the U.S. economy remains 14.7 points below February's 57 reading. The index registered a low of 32.1 in December 2007 as the U.S. economy entered recession.
The personal finances subindex remained in positive territory in April, at 50.2, though that was the lowest level since October 2013.
The federal policies subindex slipped 1.3 points to 53.8 in the May poll, but remained positive. Approval of President Trump continued to benefit from support for the federal coronavirus response.
IBD/TIPP surveyed 1,225 adults from April 26-April 29. Due to the coronavirus shutdown, the poll was conducted online using Technometrica's network of online panels to provide the sample.
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