The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, rose 7.8%, moving from 52.9 in November to 57.0 in December.
As such, the index continues its record run in positive territory, remaining above 50.0 for 39 consecutive months. An index reading below 50.0 for the IBD/TIPP indexes indicates pessimism.
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. IBD/TIPP conducted its national telephone poll of 905 adults from December 5 - December 14, using live interviewers and both cell phone and landline numbers. The margin of error is +/-3.3 percentage points.
In addition to the Economic Optimism Index, IBD/TIPP surveyed respondents on key political issues for the separate Presidential Leadership Index and National Outlook Index as well as developing the Financial Related Stress Index.
After falling by 5.6% in November, the Presidential Leadership Index rose across every component in December and increased by 9.2% overall. The December index reading was 46.2, up from 42.3 in November. President Trump’s Job Approval rating in particular rebounded after a significant slide last month.
This month, approval was up 11.4%, with a reading of 46.0. His Favorability rating also rose by double digits -- up 11.2% -- moving from 42.0 to 46.7. All components on this index reached their highest levels since July 2019.
The National Outlook Index also rose by 9.2% in December, yielding a reading of 47.7. The increase was propelled by a big jump on the Standing in the World component, which went up 16.7%. The increase comes after November’s reading marked its lowest since December 2017-- 39.5. The component now stands at 46.1, its highest reading since May 2019.
The Financial Related Stress Index reflected slightly less stress as well. December’s reading of 50.7 decreased by 1.0%. A reading below 50.0 on this index indicates that consumers feel less financial stress while a reading above 50.0 equals more financial stress. The index has been above 50.0 for four consecutive months.
“As we prepare to close out a roller coaster 2019, Americans are ending the year on a bullish note,” said Terry Jones, IBD's commentary editor. “Despite deep partisan divisions, general sentiment is improving, particularly when it comes to economic optimism.”
The flagship IBD/TIPP Economic Optimism Index has three key components. This month, all three increased.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, increased by another 12.8% after rising 8.0% last month. The component also returned to positive territory for the first time since August 2019, with a reading of 53.0.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, rose by 2.3% in December. It yielded a reading of 63.1 this month compared to 61.7 last month.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, increased 9.8%, moving from 50.1 last month to 55.0 in December.
"With unemployment at its lowest point in half a century, more than a quarter of a million new jobs added, and a holiday shopping season projected to top $1 trillion for the first time, the economy is roaring,” said Raghavan Mayur, president of TechnoMetrica who directed the poll. “Stocks have also reached record highs and are on an upswing as phase one of the U.S.’ trade deal with China moves forward. Consumers appear to feel great about their economic prospects heading into 2020.”
This month, 19 of 21 demographic groups — such as age, income, race and party preference — that IBD/TIPP tracks were at or above 50 on the Economic Optimism Index. That’s three higher than November and two higher than in October and September. Nineteen groups rose during the month, up from 14 in November, 12 in October, and just three groups in September and five in August. All groups rose in July, following an across-the-board drop in June.
On the Economic Outlook component, 15 of the 21 groups that IBD/TIPP tracks scored in optimistic territory, versus just six in November, one in October, three in September and 11 in August. Optimism surged in December, with Republicans and those over age 65 the most optimistic of all. Independents, a key swing vote, posted their first optimism reading over 50 since last May.
On the Personal Financial component, all 21 groups IBD/TIPP tracks again remained in optimistic territory, as in November and October. That’s up from 19 in September. Fourteen groups rose, the same as in November, after 12 groups rose in October and just three groups rose in September and seven in August. Democrats fell for the first time in three months, but still remained in optimistic territory. Eight groups fell, up from six in November and equal to October’s tally. In September, 18 fell, and 14 fell in August, the same as in July.
On the Federal Policies component, 16 of the 21 demographic groups tracked were above 50, up from 10 in November, 13 in October, 11 in September, 12 in August. This month, 19 groups rose, compared to five in November, 15 in October, six in September and four in August.
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 900-plus adults chosen at random nationwide. The national poll is generally conducted in the first week of the month by live interviewers and both cell phone and landlines.
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