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The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, declined another 1.6% this month, after falling 7.6% in January. The overall reading now stands at 44.0, keeping the index in negative territory for the sixth 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 February index, IBD/TIPP surveyed 1,355 adults from February 2-4. 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 tumbled in February, falling 9.1%, from 48.4 to 44.0. This marks the second consecutive month of decline across every index component. Job Approval dropped the most, moving from a reading of 49.2 in January to 44.4 (down 9.8%). Additionally, the Leadership component, now at 42.1, is below 50.0 for the sixth consecutive month.
The National Outlook Index continued to trend negative as well. It fell from 43.6 in January to 41.7 in February– a 4.4% drop. The “Quality Of Life” component was the only area to improve, rising just 0.8% and remaining the only component in positive territory at 51.1. The Morals & Ethics component is now at its lowest point (34.4) since January 2021 (28.7), during the transition between the Trump and Biden Administrations.
There was some positive momentum with the Financial Related Stress Index this month, however. It declined by 3.0% and now sits at 64.2, down from 66.2 in January. 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 two years ago, in February 2020 (48.1).
“Despite the Great Resignation and ample jobs to be had, only 19% of people believe wages are keeping pace with inflation, which is causing frustration. With food prices increasing for consumers, and shortages of household items becoming an issue for a majority, the present economic climate leaves much to be desired for large swaths of the population.
At the same time, financial stress is going down and the Six-month Outlook improved slightly, as did Quality of Life, so there are some positive signs when looking towards the future if we can get through the present bumpy patch.
The flagship IBD/TIPP Economic Optimism Index has three key components. In January, 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, was the only component to rise, though it remains entrenched in negative territory. It moved from 37.9 in January to 38.9 – a 2.6% increase.
The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, declined by 1.7%, moving from 52.3 last month to 51.4 this month. This is the only component that has been in positive territory for the last six months.
Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, fell the most of any index component at 5.0%. It now sits at 41.7, down from 43.9 last month.
As optimism continues to decline overall, President Biden’s job approval plummet. It dropped to 38% in February. Only 27% of Americans believe the economy is improving, and people view a lack of trust in our politicians and government structures as one of the biggest issues we face as a nation.
