The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, rose from 38.1 in August to 44.7 in September– a 17.3% jump. Despite gaining ground, the index remained in negative territory for the 13th 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.
For the latest index, IBD/TIPP surveyed 1,277 adults from September 7-September 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.
The Presidential Leadership Index rose by 16.9% in September. Its overall reading of 48.4 this month was a marked rise from August’s 41.4, the low point of Biden’s presidency. And the Favorability component, the highest on the September index, neared positive, with its reading climbing 18.0% this month to reach a reading of 49.9.
After four months of consecutive decline, the National Outlook Index increased in September. Its overall reading rose to 44.4, up 18.7% from 37.4 in August– its lowest mark in more than a decade. September’s reading was the index’s highest in the last six months.
Two components– Direction of the Country and Morals & Ethics– showed particularly large gains, with readings moving up 25.4% and 23.3% respectively. Additionally, the Quality of Life component moved into positive territory, the only component to do so, with a reading of 51.8, up 14.3% from last month.
Financial Related Stress improved in September as well. Stress declined by 1.3%, moving from 68.5 in August to 67.6 this month– its lowest reading since March 2022. 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).
“September’s indexes built on the few glimmers of optimism we identified last month,” said Ed Carson, IBD’s news editor. “Now, with the reading of every component across the Economic Optimism, Presidential Leadership and National Outlook indexes rising by double digit percentages, Americans seem to believe that a recession as well as inflationary pressure will be short-lived. It will be interesting to watch if this trend toward positivity continues.”
The flagship IBD/TIPP Economic Optimism Index has three key components. In September, all three increased.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, was the lowest of the index components this month, yet its reading experienced the highest percentage increase. September’s 39.5 rose 21.2% over August’s 32.6.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, moved into positive territory for the first time since May 2022. The component reading climbed 11.8% in September, moving from 46.5 last month to 52.0 this month.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, rebounded and then some from August’s 7.1% drop. In September the component reading went up 21.0%, moving from 35.3 to 42.7.
“There has been a general surge in optimism this month, despite some ongoing apprehension about the economy,” said Raghavan Mayur, president of TechnoMetrica, who directed the poll. “While 90% of Americans are concerned about inflation, 32% believe the economy is improving, compared to just 21% last month. With gas prices falling and low unemployment, people appear to believe that better days are on the way.”
Economic Optimism Index Breakdown
This month, six 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. just one in August, three in July, one in June, four in May, seven in April, three in both March and February and five in January. All 21 groups rose in September vs. 11 in August, 10 in July, 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, three of the 21 groups that IBD/TIPP tracks scored in optimistic territory after none did in June-August, just one in May, three in April and one in March, February and January. Optimism over the economy’s six-month outlook rose for 21 groups in September vs. 10 in August, 16 in July, five in June, zero in May, 20 in April, one in March, 11 in February and four in January.
For the Personal Financial component, 13 groups IBD/TIPP tracks were in optimistic territory vs. seven in August and July, six in June, nine in May, 14 in April, six in March, 14 in February and 15 in January. All 21 groups rose after 11 did in August, nine in July, two in June, six in May, 19 in April, two in March, none in February and six in January.
For the Federal Policies component, one of the 21 demographic groups tracked was above 50.0 vs. two in July, one in June, four in May, six in April, three in March and February and two in January. Five groups rose in August vs. five in July, four in June, one in May, 18 in April, 10 in March, four in February and five in January.