Presidential Leadership Index falls while National Outlook Index rises slightly
LOS ANGELES–(BUSINESS WIRE)–The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, today revealed that consumer confidence fell from its neutral position (50.0) into negative territory (49.0) in December. This month, the Economic Optimism Index declined by 2.0% overall after last month’s 9.4% slide. For the IBD/TIPP indexes, a reading above 50.0 signals optimism and below 50.0 indicates pessimism.
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 surveyed 1,209 adults from December 1 to December 3. The poll was conducted online using TechnoMetrica’s network of online panels to provide the sample.
Republicans and Democrats tend to view the economy positively when the president hails from the same political party. With the IBD/TIPP survey taking place as President Trump continues to battle the election results in the courts, a partisan shift may take slightly longer to settle.
Republicans’ economic optimism tumbled from 74.0 in October to 57.9 in November and now 48.0 in December, their lowest reading since November 2016 when Donald Trump was elected. Meanwhile, Democrats’ view of the economy jumped to 55.9 in December vs. 49.1 in November, 42.5 in October and 32.9 in September. The December reading was the highest for Democrats since November 2016.
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.
This month, the Presidential Leadership Index declined across all measures, moving from 47.6 in November to 45.8 in December — a 3.8% dip. All components remained in negative territory, as they have throughout each month of the Trump presidency. The Favorability component fell the most, 4.4%, moving from 47.8 to 45.7.
Conversely, the National Outlook Index rose by 0.9% overall in December, moving from 45.2 to 45.6. This index experienced increases in four of six components, the most notable of which was a 7.8% rise on the Standing in the World component. It moved from 47.4 last month into positive territory this month at 51.1.
Financial stress improved slightly in December, decreasing from 66.7 in November to 65.4 this month. The reading continues to keep the index well above 50.0. A reading over 50.0 equals more financial stress while a reading below 50.0 on this index would indicate consumers feel less stress. This index has been above 50.0 since March.
“In the first indexes since the election was called, we got a bit of a mixed bag, which is not surprising given the state of the country right now,” said Ed Carson, IBD’s news editor. “After a long and contentious election cycle, the expectation was that we would be able to move forward as a nation. Instead, with COVID-19 numbers climbing rapidly, a weaker than expected jobs report and no concession on the horizon from President Trump, Americans are unsure of what the future may hold.”
The flagship IBD/TIPP Economic Optimism Index has three key components. This month, two of the three declined.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, dipped by 1.5%, moving from 47.0 in November to 46.3 in December. This decline kept the component in negative territory for the second consecutive month.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, increased by 1.4%. It moved from 55.6 last month to 56.4 this month.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, fell the most. It dropped from 47.3 in November to 44.4 in December — a 6.1% decline.
“The economy is weighing heavily on Americans, particularly as we enter the holiday season. Only 29% of people believe the economy is improving while 50% think we are in a recession. The job situation is also grim, with 41% of households reporting that they have at least one person looking for a full-time job, and another 42% are concerned about job loss in the household. Currently, 62% of respondents are struggling to make monthly car, mortgage/rent payments,” said Raghavan Mayur, president of TechnoMetrica, who directed the poll. “The slowdown in job creation appears to be making people nervous. Couple that with the fact that Congress has been unable to agree on a new stimulus bill over the past several months, and there is a lot of frustration, even amid some bright spots.”
Economic Optimism Index Breakdown
This month, nine of 21 demographic groups — such as age, income, race and party preference — that IBD/TIPP tracks are above 50.0, in positive territory, on the Economic Optimism Index. That’s vs. eight in November, 15 in October, three in September, four in August and two in July. Nine groups rose this month vs. just three in November, all 21 in October, seven in September, 17 in August and two in July.
For the Six-Month Economic Outlook component, seven of 21 groups that IBD/TIPP tracks scored in optimistic territory vs. eight in November, 13 in October and just one in the prior three months. Optimism over the economy’s six-month outlook rose among 10 groups vs. four in November and all 21 in October.
For the Personal Financial component, 19 groups IBD/TIPP tracked were in optimistic territory vs. 18 in November, 20 in October, 13 in September, 15 in August and 11 in July. Thirteen groups improved vs. just three groups in November, 19 in October, five in September, 15 in August and 12 in July.
For the Federal Policies component, five of the 21 demographic groups tracked were above 50.0, the same as in November. In October, 10 groups were above 50.0 vs. two in September, eight in August and one in July.
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 1,200 adults conducted using a network of online panels. The national poll is generally conducted in the first week of the month.
For more information, go to www.tipponline.com. To license the IBD/TIPP Poll, please contact [email protected].
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