After September Surge, Economic Optimism Plunges in October IBD/TIPP Poll
The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, fell from 44.7 in September to 41.6 in October- a change of 6.9%. This kept the index in negative territory for the 14th 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 1,376 adults October 5-October 7. 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 declined by 6.8% in October. Its overall reading of 45.1 dipped from last month's 48.4 but remained above the readings for August (41.4), July (44.5), June (42.7) and May (44.7). Each individual component of the index fell, with Job Approval losing the most ground; its reading of 49.0 in September moved to 45.3 in October- a 7.6% drop.
The National Outlook Index slipped in October as well. Its reading of 41.4 fell 6.8% from September's 44.4. Although every component of the index declined this month, it still maintained the second-highest overall reading over the last six months, behind September's surge. In terms of specific components, Morals & Ethics dropped the most, moving from 37.1 in September to 34.0 in October- an 8.4% decline- while the Quality of Life component dipped back into negative territory this month at 47.6 after spending September at a positive 51.8.
Financial Related Stress increased by 2.8% in October, moving from 67.6 in September- its lowest reading since March 2022- to 69.5. 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).
"The optimism we saw rising last month wasn't fully erased in October, but it did take quite a hit," said Ed Carson, IBD's news editor. "Any time every component on every index declines, it draws attention, but the dips this month were smaller than last month's significant gains. Rather than extending September's optimism, consumers seem to be acknowledging 'We're not out of the woods yet.' They're ruminating about the effects of economic instability on their lives and how such instability may persist. This is reflected in the more negative sentiment."
The flagship IBD/TIPP Economic Optimism Index has three key components. In October, all three declined.
Economic Optimism Index Breakdown
For the Six-Month Economic Outlook component, just one of the 21 groups that IBD/TIPP tracks scored in optimistic territory vs. three in September, none in June to August, just one in May and three in April. Optimism over the economy's six-month outlook rose for five groups vs. all 21 in September, 10 in August, 16 in July, five in June, zero in May and 20 in April.
For the Personal Financial component, nine groups IBD/TIPP tracks were in optimistic territory vs. 13 in September, seven in August and July, six in June, nine in May and 14 in April. Just three groups rose vs. all 21 in September, 11 in August, nine in July, two in June, six in May and 19 in April.
For the Federal Policies component, five of the 21 demographic groups tracked were above 50.0 vs. four in September, one in August, two in July, one in June, four in May and six in April. Nine groups rose in October vs. all 21 in September, five in July, four in June, one in May and 18 in April.
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