In First IBD/TIPP Poll of the New Year, Economic Optimism Takes a Dive
The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, fell 7.6% in January. The reading of 44.7, down from 48.4 in December, keeps the index in negative territory for the fifth 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 January index, IBD/TIPP surveyed 1,308 adults from January 5-8. The poll was conducted online using TechnoMetrica's network of online 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 edged down in January after last month's bounce. This month's index dropped 2.4%, with a reading of 48.4, down from 49.6. Notably, every index component has declined, with two moving into negative territory. The Favorability component moved from 51.1 in December to 49.6 this month (-2.9%) while Job Approval shifted from 50.1 to 49.2 (-1.8%). The Leadership component, now at 46.4, remains below 50.0 for the fifth consecutive month.
After last month's 10.1% increase, the National Outlook Index reversed course as well. It fell from 47.0 in December to 43.6 in January - a 7.2% drop. The Standing in the World component declined the most - down 11.4% to a reading of 39.8 - while Quality of Life remained the only component in positive territory at 50.7.
Additionally, the Financial Related Stress Index crept up. It now sits at 66.2, up from 65.1 in December. A reading over 50.0 equals more financial stress while a reading below 50.0 on this index would indicate consumers feel less stress. The index was last below 50.0 nearly two years ago, in February 2020 (48.1).
"Inflation continues to be the biggest worry for Americans, with a staggering 86% expressing their concern this month," said Ed Carson, IBD's news editor. "It's also worth noting that the Six-Month Economic Outlook fell by more than 11% over the course of a month. We saw relatively comparable slides in this component at the start of past recessions. It is definitely a marker to watch moving forward."
The flagship IBD/TIPP Economic Optimism Index has three key components. In January, all three decreased.
Economic Optimism Index Breakdown
For the Six-Month Economic Outlook component, one of 21 groups that IBD/TIPP tracks scored in optimistic territory vs. six in December, two in November, four in October, five in September, eight in August, nine in July and 17 in June. Optimism over the economy's six-month outlook rose in four groups vs. 18 in December, three in November, 11 in October, zero in September, 10 in August, one in July and 15 in June.
For the Personal Financial component, 15 groups IBD/TIPP tracks were in optimistic territory for a second straight month vs. 11 in November, 16 in September and October, 19 in August and July and 18 in June. Six groups rose after 17 did in December, three in November and eight in October vs. three in August and September. Fifteen rose in July and 10 in June.
For the Federal Policies component, two of the 21 demographic groups tracked were above 50.0 vs. eight in December, three in November, eight in October, nine in September, 10 in August, 12 in July and 17 in June. Five groups rose in January vs. 18 in December, four in November, three in October, two in September, 12 in August, three in July and 18 in June.
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