As Time Passes, Consumers’ Economic Optimism Continues to Grow
Economic optimism not only continues to inch higher, but it is moving closer to the pre-COVID reading of 59.8, according to the IBD/TIPP Economic Optimism Index, a poll on consumer confidence.
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The index reported a reading of 56.4 on April 6, a 1.8% increase from 55.4 in March. April was the fourth consecutive month the poll has risen. A reading above 50.0 signals optimism and below 50.0 indicates pessimism.
IBD/TIPP surveyed 1,436 adults online from March 31 to April 3. Los Angeles-based Investor’s Business Daily, which operates the IBD/TIPP Economic Optimism Index, said the poll has established a strong track record of foreshadowing the confidence indicators issued later each month by the University of Michigan and The Conference Board.
“This month’s indexes, more than any since the start of the pandemic, indicate that consumers have hope that their financial lives will improve in the coming months,” said Ed Carson, IBD’s news editor. “With stimulus checks in consumers’ hands, ‘Now Hiring’ signs appearing in more businesses, and nearly half of poll respondents receiving at least their first vaccine, there is cautious optimism for their future economic prospects.”
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 declined 2.4%, after last month’s 2.2% slide. President Biden’s current 60.2 reading remains higher than any month of the Trump presidency. Additionally, all of the index components are in positive territory for the third consecutive month.
The National Outlook Index rose modestly in March. This month’s reading of 55.0 was up 0.2%, claiming the spot for the highest reading since January 2004. Notably, the Direction of the Country component continued to increase, up another 2.7% to 54.1 after rising 42.9% in February and 15.6% in March. The Morals and Ethics component also climbed 3.0% to 45.3, making it the new highest reading since November 2004’s 48.0. Yet, the Quality of Life component declined 0.3% to 59.6, and the Standing in the World component fell 2.3% to 54.5.
Of all of the indexes, the Financial Related Stress index experienced the greatest change. In April, stress declined by 7.9%, moving from 61.7 last month to 56.8 this month — its best reading since March 2020’s 51.3. A reading over 50.0 equals more financial stress while a reading below 50.0 on this index would indicate consumers feel less stress. This index was last below 50.0 in February 2020 (48.1).
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, increased by 5.1%, moving from 49.5 in February to 53.2 in March and now to 55.9 in April.
• The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, declined by 1.2%, moving from 58.0 last month to 57.3 this month.
• Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, increased from 54.9 in March to 56.0 in April — a 2.0% gain.