Consumer Sentiment Rebounds in March IBD/TIPP Poll
LOS ANGELES--(BUSINESS WIRE)--Mar 5, 2019--The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, rose 10.7 percent in March, ending a four-month slide. Its reading of 55.7 ensures that the index continues its record run in positive territory. The Economic Optimism Index has now spent 30 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 907 adults from February 21 to March 2, 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. All indexes rose significantly in March, just one month after every component across every index had dropped. By contrast, March’s poll saw the Presidential Leadership Index increase by 7.2 percent, moving from 41.9 in February to 44.9 this month. It is now at its highest point since August 2018.
The National Outlook Index rose even more, moving from 41.9 last month to 46.9 in March -- an increase of 11.9 percent. Four components reflected double-digit percentage increases while every measure gained. Most notably, the Direction of the Country component rose 27.6 percent and the Morals and Ethics component climbed 17.4 percent.
Additionally, the Financial Related Stress Index declined by 8.0 percent in March, with a reading of 50.9 compared to February’s 55.3. A reading below 50 on this index indicates that consumers feel less financial stress while a reading above 50 equals more financial stress.
“Such a positive momentum bounce after last month’s across-the-board decline feels a bit like whiplash, but now that Congress has passed the budget, and the president has officially signed off, Americans are breathing a sigh of relief,” said Terry Jones, IBD’s Commentary Editor. “Much of the stress and frustration we saw last month has been alleviated. Although sharp partisan divides still exist on key issues, people generally feel good about their economic prospects.”
The flagship IBD/TIPP Economic Optimism Index has three key components. This month, all three increased.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, rose 16.0 percent to 51.6. The component returns to positive territory after spending three months below 50.0. It also 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, climbed by 4.3 percent to a reading of 62.6. This jump comes after it hit its lowest reading in more than a year last month.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, increased by 14.3 percent. It moved from 46.3 to 52.9, returning to positive territory after a steady three-month decline.
“The recent rebound in consumer confidence reflects a normalizing in Americans’ sentiment towards economic conditions as the 35-day partial government shutdown fades into history. In addition, consumers are breathing a collective sigh of relief over the Federal Reserve’s recent decision to pause further interest rate hikes, which will likely keep borrowing costs low,” said Raghavan Mayur, president of TechnoMetrica Market Intelligence, IBD’s polling partner. “Economic optimism has also been supported by a resilient labor market that continues to create jobs at a stellar pace. Despite the government shutdown and inclement winter weather throughout the country, the U.S. economy added 304,000 new jobs in January, the most in nearly a year. Further, January marked the sixth straight month in which annual wage growth has reached or exceeded 3.0 percent. Consumers are also reaping the cost-saving benefits from persistently low gas prices. Finally, expectations are growing that a trade agreement between the U.S. and China is nearing completion, which could lift most U.S. tariffs on Chinese goods.”
This month, 16 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 up from 10 in February. Twenty groups rose during the month, up from just four in February. Only one group -- those earning 30K or less -- was the same for the month.
On the Economic Outlook component, 10 of the 21 groups that IBD/TIPP tracks scored in optimistic territory, up from just two in February and six in January.
On the Personal Financial component, all 21 groups IBD/TIPP tracks remained in optimistic territory, as 19 groups rose while two declined. Notably, Democrats stayed in optimistic territory, despite the government shutdown. The index stood at 62.6 in March, after hitting an all-time high of 66.7 in October.
On the Federal Policies component, 13 of the 21 demographic groups tracked were above 50, up from four in February, seven in January, and 11 in December. Nineteen groups rose, one fell, and one stayed the same.
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.
Investor’s Business Daily (IBD) is a leading financial news and research organization recognized for proprietary stock screens, comparative performance ratings and a record of identifying stock leaders as they emerge. The company takes a data-first approach to investing, educating investors about how to invest successfully using tested methods and sound research. IBD has honed its approach over the last 50 years to help investors make smarter decisions. Its stock lists have outperformed the S&P, and its presidential poll, the most accurate over the past four election cycles, was one of only two national polls to accurately predict the outcome of the 2016 Presidential Election. IBD offers a number of interactive stock research tools and provides information for investors of every level. To learn more about all that IBD has available, please visit www.investors.com.
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SOURCE: Investor’s Business Daily
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PUB: 03/05/2019 10:00 AM/DISC: 03/05/2019 10:01 AM