LOS ANGELES -- June 11, 2019 -- 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.
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.
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