LOS ANGELES -- April 9, 2019 -- The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, dropped 2.7 percent in April to a reading of 54.2, down from 55.7 last month. Nevertheless, the reading remains in positive territory for a record 31 consecutive months. 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 902 adults from March 28 to April 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. Both the Presidential Leadership and National Outlook Indexes dipped slightly while the Financial Related Stress Index continued to improve. The Presidential Leadership Index went down by less than a percent, moving from 44.9 in March to 44.6 in April. Index components showed that Trump’s Favorability reading remained unchanged, and his Job Approval increased 2.5 percent, but his score for Leadership fell 4.1 percent.
The National Outlook Index declined 1.1 percent, going from 46.9 in March to 46.4 in April. Every component of the index dipped slightly except Standing in the World, which rose by 2.0 percent.
Financial Related Stress went down for the second straight month, returning to a favorable level for the first time since October 2018. Stress fell by 2.0 percent, shifting from 50.9 last month to a reading of 49.9 this month. A reading below 50 on this index indicates that consumers feel less financial stress while a reading above 50 equals more financial stress.
“While there was some movement in April’s indexes, it was not the kind of wild swings we’ve experienced in recent months,” said Terry Jones, IBD's Commentary Editor. “Consumers are starting to raise an eyebrow about the six-month economic outlook, as that component touched negative territory, but overall Americans continue to feel good about their personal financial lives, and their views across all metrics are relatively stable.”
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, fell 5.4 percent, yielding a reading of 48.8 in April, down from 51.6 in March. It still remains 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, was down 0.3 percent. Its reading moved from 62.6 last month to 62.4 this month.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, decreased 2.6 percent after last month’s rare 14.3 percent increase. The component moved from 52.9 in March to 51.5 in April.
“Thirty-one months in a row our index has registered optimism,” said Raghavan Mayur, president of TechnoMetrica Market Intelligence, IBD's polling partner. “In the Trumpian economy, the job market is strong, the stock market is doing well, the Fed is holding the line on interest rates, and the gasoline prices are holding. Americans are upbeat with low levels of financial stress.”
This month, 14 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 was down from 16 in March. Thirteen groups rose during the month, vs. 20 in March. Only one group -- Democrats -- was the same for the month.
On the Economic Outlook component, eight of the 21 groups that IBD/TIPP tracks scored in optimistic territory, down from 10 in March but up from just two in February.
On the Personal Financial component, all 21 groups IBD/TIPP tracks remained in optimistic territory, as 11 groups rose while 10 declined. Notably, the index stood at 62.4 in April, after hitting an all-time high of 66.7 in October.
On the Federal Policies component, 11 of the 21 demographic groups tracked were above 50, down from 13 in March but up from four in February and seven in January. Seven groups rose and 14 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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