[October 03, 2023]

New IBD/TIPP Poll Shows Economic Optimism Plummeted in October

The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, fell 16.0% in October. After climbing to a reading of 43.2 last month, the index plummeted to 36.3 this month. This marks the lowest reading on the index since August 2011 (35.8). Additionally, the index has now been in negative territory for 26 consecutive months. 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 October index, IBD/TIPP surveyed 1,378 adults from September 27-29. 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 12.0% in October, with its overall reading shifting from 44.3 in September to 39.0 this month. Biden's Favorability reading had the most significant fall, moving from 46.3 last month to 39.5 in October, a 14.7% change. This was the lowest reading on the component since Trump's 38.6 in September 2020. Notably, all index components remained in negative territory for the sixth consecutive month.

October's National Outlook Index hit its lowest mark since IBD/TIPP first published this index in February 2001. Its overall reading of 34.8 was down 14.7% from September's 40.8. The Morals & Ethics component posted the biggest drop, falling 17.7% from 31.0 to 25.5, while the Quality of Life component moved back into negative territory with a reading of 44.2, down from 51.1 (-13.5%).

The Financial-Related Stress Index increased for the fourth consecutive month in October, moving from September's reading of 68.1 to 70.5 this month, a 0.7% change. It was the highest reading on this index since December 2008 (71.0). 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).

"After a promising September, numbers fell off a cliff this month," said Ed Carson, IBD's news editor. "Several index components set off alarm bells. Additionally, only 20% of people believe the economy is improving, just 16% think wages are keeping pace with inflation and 28% are bullish on the market compared to 40% last month. These are substantial changes worth following. We're clearly not out of the woods when it comes to the economy."

The flagship IBD/TIPP Economic Optimism Index has three key components. In October, all three declined.

• The Six-Month Economic Outlook, a measure of how consumers feel about the economy's prospects in the next ix months, dropped from 38.3 in September to 28.7 in October, a staggering 25.1% change. This was the lowest reading for this component since the index debuted in February 2001.
• The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, fell 11.4% from its previous reading of 52.8 to this month's 46.8. This returned the component to negative territory.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, declined from September's 38.6 to 33.5, a 13.2% change. It was the component's lowest reading since October 2013 (31.2).

Economic Optimism Index Breakdown

This month, just one of 21 demographic groups - such as age, income, race and party preference - that IBD/TIPP tracks was above 50.0, in positive territory, on the Economic Optimism Index. That's vs. three in September, one in August, three in July, two in June, six in May, 10 in April, eight in March, six in February and three in January. No groups rose vs. 15 in September, six in August, nine in June and July, zero in May, 13 in April, 12 in March, 13 in February and eight in January.

For the Six-Month Economic Outlook component, none of the 21 groups that IBD/TIPP tracks scored in optimistic territory, vs. three in September and zero in June-August. In May, one group was above 50, vs. seven in March and April, four in February and zero in January. Optimism over the economy's six-month outlook rose in no groups vs. 14 in September, nine in August, 14 in July, 11 in June, one in May, 11 in March and April, 13 in February and nine in January.

For the Personal Financial component, five groups that IBD/TIPP tracks were in optimistic territory vs. 14 in September, eight in August, 10 in July, 11 in June, nine in May, 13 in April, 12 in March and 10 in January and February. Two groups rose after 19 did in September and eight in July and August. Just one group rose in June, two in May, 14 in April, 16 in March, 15 in February and nine in January.

For the Federal Policies component, one of the 21 demographic groups was above 50.0 vs. four in September, one in August, two in July, one in June, five in May, nine in April, eight in March, four in February and three in January. One group rose vs. 10 in September, five in August, 10 in July, eight in June, three in May, 12 in April, 10 in March, 14 in February and 11 in January.

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 email [email protected].

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