Financial Stress Index hits record low and National Outlook Index gets a boost while Presidential Leadership Index yields mixed results
The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, continued to reflect positivity in January, rising 0.7% to 57.4. Despite a slight decline on the Six-Month Economic Outlook component, the index maintained its record run in positive territory, remaining above 50.0 for 40 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 901 adults from January 3 - January 11, 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 the Financial Related Stress Index.
This month, the Presidential Leadership Index rose slightly overall, from 46.2 to 46.5 -- a 0.6% increase. While President Trump’s Favorability and Job Approval ratings declined, by 2.8% and 0.4% respectively, his Leadership rating offset the dip. The Leadership component rose 5.4% to reach 48.4, the component’s highest reading since May 2019.
The National Outlook Index increased across every component in January, yielding a reading of 49.0-- up 2.7% from December. The increase was propelled by a jump on Morals & Ethics, which rose 12.7%, from 29.2 last month to 32.9 this month.
The Financial Related Stress Index hit a new record in January. This month’s reading of 47.1 marked the lowest level of financial stress experienced since IBD began tracking the measure in December 2007. The index also dropped below 50.0 for the first time in five months. 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.
“This month’s indexes revealed very few shaky spots,” said Terry Jones, IBD's commentary editor. “Even as tensions run high with Iran, the stock market continues to perform, which has quelled potential unease. Additionally, Americans are less stressed about finances than they have been in more than a decade.”
The flagship IBD/TIPP Economic Optimism Index has three key components. This month, two of the three increased.
- The Six-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, declined by 3.6% after December’s double-digit increase. The component remained in positive territory for a second consecutive month however with a reading of 51.1.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, increased by 2.4% in January. It yielded a reading of 64.6 this month compared to 63.1 last month.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, increased another 2.5%, moving from 55.0 in December to 56.4 in January.
"The stock market remains exceptionally strong and has almost returned to the level of ‘peak happiness’ last attained in 2018. Stocks also hit new record highs after President Trump announced a de-escalation of tensions with Iran,” said Raghavan Mayur, president of TechnoMetrica who directed the poll. “Unemployment also held steady at 3.5% -- a rate not experienced since 1969 -- and women represented more than half of the paid workforce for only the second time in history. Americans feel secure financially and remain optimistic about their economic prospects moving forward.”
This month, 20 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 one higher than December, four higher than November and three higher than October and September. Eleven groups rose during the month, down from 19 in December, but up from 14 in November, 12 in October, and just three groups in September.
On the Economic Outlook component, 12 of the 21 groups that IBD/TIPP tracks scored in optimistic territory, versus 15 in December, six in November, one in October, three in September and 11 in August. Optimism over the economy’s six-month outlook fell among all three political groups and among both investors and non-investors alike. But optimism among Independents, a key swing vote in upcoming elections, remained above 50 for a second month in a row as the election season kicks off.
On the Personal Financial component, all 21 groups IBD/TIPP tracks again remained in optimistic territory, as in December, November and October. That’s up from 19 in September. Seventeen groups rose, up from 14 in December and November, 12 in October and just three in September. Democrats, Republicans and Independents all increased. Just four groups fell, down from eight in December, six in November and eight in October. 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 and 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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