The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, rose 1.0% in July to 38.5. The index now has been in negative territory for 11 consecutive months. 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.
For the July index, IBD/TIPP surveyed 1,643 adults from July 6 to July 9. 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.
One month after the lowest readings of the Biden presidency, the Presidential Leadership Index increased across every component. Its overall reading of 44.5 was up 4.2% from June’s 42.7. Still, all index components remain in negative territory for the third consecutive month. The Favorability component rose the most, however, climbing 6.9% from 43.5 in June to 46.5 in July.
The National Outlook Index fell by 0.8% this month to 38.6, down from 38.9 overall in June. Morals & Ethics remains the lowest of any component at 32.0, falling 3.9% from last month’s reading of 33.3, while the Quality of Life component dropped the most at 4.5% to 44.4, down from June’s reading of 46.5. Like the Presidential Leadership Index, all components on the National Outlook Index remain in negative territory.
Financial Related Stress inched down 0.3% to 69.3 in July. A reading over 50.0 on this index equals more financial stress while a reading below 50.0 would indicate consumers feel less stress. The index was last below 50.0 in February 2020 (48.1).
“Consumers are concerned about their personal finances,” said Ed Carson, IBD’s news editor. “Ninety-one percent of people are worried about inflation, feeling the effects at the pump, in their food budgets, and more. The numbers across the board remain pretty anemic.”
The flagship IBD/TIPP Economic Optimism Index has three key components. In July, two increased and one declined.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, rose 5.2% this month. Its reading of 32.2 is up from June’s mark of 30.6, which was the lowest reading in more than a decade.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, had the highest reading of the Economic Optimism Index components in July at 45.3, but it was still down 2.4%, keeping it in negative territory for a second consecutive month. This also marks the new lowest reading for this component since the Economic Optimism Index began tracking it in February 2001.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, showed a slight improvement, rising 1.6% from 37.4 in June to 38.0 in July.
“Inflation and fears of recession have been the great summer spoiler. Just as Americans were ready to head out on vacation, gas prices sting and many flights have been cancelled. Eighty-nine percent of people are scaling back on their travel plans,” said Raghavan Mayur, president of TechnoMetrica, who directed the poll. “Fifty-eight percent of Americans believe the country is in a recession. The public opinion supports the economic data. GDP growth in the first quarter was -1.6 percent. The Atlanta Fed’s GDPNow gauge forecasts -1.2 percent growth in the second quarter.”
Economic Optimism Index Breakdown
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. one in June, four in May, seven in April, three in both March and February and five in January. Ten groups rose in July vs. three in June, one in May, 20 in April, three in March, eight in February and three in January.
For the Six-Month Economic Outlook component, none of the 21 groups that IBD/TIPP tracks scored in optimistic territory for a second straight month. That’s vs. one in May, three in April and one in March, February and January. Optimism over the economy’s six-month outlook rose for 16 groups in July vs. five in June, zero in May, 20 in April, one in March, 11 in February and four in January.
For the Personal Financial component, seven groups IBD/TIPP tracks were in optimistic territory vs. six in June, nine in May, 14 in April, six in March, 14 in February and 15 in January. Nine groups rose after two did in June, six in May, 19 in April, two in March, none in February and six in January.
For the Federal Policies component, two of the 21 demographic groups tracked were above 50.0 vs. one in June, four in May, six in April, three in March and February and two in January. Thirteen groups rose in July vs. four in June, one in May, 18 in April, 10 in March, four in February and five in January.