[February 07, 2023]

February's IBD/TIPP Poll Shows Economic Optimism on the Rise

The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, rose 6.6% in February. Its latest reading of 45.1, up from January's 42.3, is the index's highest since April 2022. However, the index remains in negative territory for the 18th 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 1,358 adults February 1-3. 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.

Building on January's 7.2% increase, February's Presidential Leadership Index climbed another 4.6%. The overall index moved out of negative territory (47.8 last month) to hit a neutral 50.0, the highest reading for this index since October 2021 (51.0). Every index component improved again this month, with two components moving into positive territory. Favorability registered 52.2, a 4.6% change, while the Job Approval component rose 4.9% to 51.5. Both components yielded their highest readings since October 2021 when they hit 52.5 and 52.2 respectively.

The National Outlook Index rose by 6.4% overall, up from 42.4 to 45.1, its highest mark since April. All six of February's components increased, and one, Quality of Life, moved into positive territory, rising from 49.6 in January to 52.7 in February. This is the highest reading on the component since December 2021. The Morals & Ethics component was also worth noting, as it was the only component to make a double-digit leap; it rose from 34.2 last month to 37.8 this month, a 10.5% shift.

The Financial Related Stress Index was the lone downside for February. Ending a three-month run of decreasing stress, the index moved from 64.7 last month to 65.8 this month, a 1.7% change. On this index, a reading over 50.0 equals more financial stress while a reading below 50.0 indicates consumers feel less stress. The index was last below 50.0 prior to the pandemic in February 2020 (48.1).

"This month's indexes provide good reasons to be cautiously optimistic about the economy in 2023," said Ed Carson, IBD's news editor. "With the exception of financial-related stress, all indexes improved, with some entering positive territory for the first time in several months. Although spending cuts remain in effect, fewer people think we're in a recession, and we're seeing significant increases in the number of people who believe the economy is improving. Economists will keep a watchful eye on whether these trends continue or if February is a one-month aberration."

The flagship IBD/TIPP Economic Optmism Index has three key components. In February, 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 9.7%, up from January's 36.2 to February's 39.7.
• The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, climbed 5.4% and returned to positive territory. The percentage change moved January's reading of 49.9 to 52.6 in February. This was its highest mark since December 2021 (54.9).
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, increased to 43.1 after spending the last two months at 40.7. The 5.9% change took the component to its best reading since April 2022.

"Despite the layoffs we're seeing in the tech sector, the job market is booming and overall economic outlook is improving," said Raghavan Mayur, president of TechnoMetrica, who directed the poll. "There has also been a big jump in the number of people who are confident of recouping their financial losses, and people have increased both their cash and new investments, which bodes well for the future."

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. three in the prior three months, six in October and September, just one in August, three in July and one in June. Thirteen groups rose vs. eight in January, 19 in December, nine in November, five in October, all 21 in September, 11 in August, 10 in July and three in June.

For the Six-Month Economic Outlook component, four of the 21 groups that IBD/TIPP tracks scored in optimistic territory, vs. zero in January, just one in the prior three months, three in September and none in June to August. Optimism over the economy's six-month outlook rose for 13 groups vs. nine in January and 11 groups in November-December. That's vs. five in October, all 21 in September, 10 in August, 16 in July and five in June.

For the Personal Financial component, 10 groups IBD/TIPP tracks were in optimistic territory, the same as in January vs. nine in December, seven in November, nine in October, 13 in September, seven in August and July and six in June. Fifteen groups rose vs. nine in January, 15 in December, 12 in November, three in October, all 21 in September, 11 in August, nine in July and two in June.

For the Federal Policies component, four of the 21 demographic groups tracked were above 50.0 vs. three in January, two in December, three in November, five in October, four in September, one in August, two in July and one in June. Fourteen groups rose vs. 11 in January, 14 in December, four in November, nine in October, all 21 in September, five in July and four in June.

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 about 1,300 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 https://tippinsights.com. To license the IBD/TIPP Poll, please contact [email protected].

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