Consumer Confidence Hits New 10-year High as Trump

LOS ANGELES, Jan. 11, 2017 (GLOBE NEWSWIRE) -- The IBD/TIPP Economic Optimism Index , a leading national poll on consumer confidence, has reached its highest level since November 2006. It gained 0.8 points, or 1.5%, in January, posting a reading of 55.6, versus 54.8 in December 2016. This continues an upward trend of three straight months in positive territory, with both December 2016 and January 2017 posting 10-year highs for optimism, a sharp turnaround after 17 months of negative sentiment that ended in October.

In January, two of the three sub-indexes rose. Overall, the Index was 6.5 points above its 12-month average of 49.1 and 11.2 points above its reading of 44.4 in December 2007, when the economy entered the last recession. January’s Index is also 6.5 points above its all-time average of 49.1. Note: Index readings above 50 indicate optimism; below 50 indicate pessimism.

The IBD/TIPP Economic Optimism Index has a strong track record of foreshadowing the confidence indicators put out later each month by the University of Michigan and The Conference Board. The IBD/TIPP presidential tracking poll , which was conducted using the same methodology as the Economic Optimism Index, was one of only two national polls to accurately predict the outcome of the 2016 presidential election and has been named the most accurate major poll over the past four election cycles. IBD/TIPP’s latest national telephone poll of consumer confidence surveyed 904 adults across the country from January 3 to January 9. The margin of error is +/-3.3 percentage points.

The IBD/TIPP Economic Optimism Index has three key components. This month, two of the index components improved. One saw only a slight dip, but remained firmly positive:

• The Six-Month Economic Outlook , a measure of how consumers feel about the economy’s prospects in the next six months, declined 0.3 points, or 0.5%, to 56.0. For perspective, the sub-index was 32.1 when the economy entered the last recession in December 2007.
• The Personal Financial Outlook , a measure of how Americans feel about their own finances in the next six months, gained 2.5 points, or 4.2%, to 62.3. This is the most positive reading since October, 2013, possibly a sign that the current low unemployment rate is making people feel more confident about their personal finances.
• Confidence in Federal Economic Policies , a proprietary IBD/TIPP measure of views on how well the federal government is doing its job, improved 0.2 points, or 0.4%, to 48.5. This is the closest to positive this component has been since August 2007, and it has been trending upwards for the past few months.

“Americans are hopeful that President-Elect Donald Trump will deliver on his promises to boost U.S. employment and grow the economy,” said Raghavan Mayur, president of TechnoMetrica, IBD's polling partner. “Since Mr. Trump’s victory, various companies, such as Ford, Alibaba, and Softbank, have committed to creating jobs here and investing in U.S. production. Further, the stock market has hit record highs and is inching closer to 20,000. These encouraging signs are why many Americans see a bright future for the U.S. economy under Trump.”

The Breakdown This month, 20 of the 21 demographic groups-- such as age, income, race and party preference-- tracked by the IBD/TIPP Poll were above 50 on the Economic Optimism Index. Fifteen groups showed increases in optimism.

The Economic Outlook component saw some of the most dramatic shifts. Sixteen of the 21 groups that IBD/TIPP tracks scored in optimistic territory, with eight groups increasing for the month. Of note is the major sentiment shift between the two main political parties since November. In the November Index, taken just before the presidential election, Democrats were highly optimistic, with a 60.3 Index reading; in the two months following Donald Trump’s unexpected win, however, Democratic sentiment plunged, declining to 27.6 in January. By contrast, Republicans’ optimism about the outlook for the economy jumped from 50.9 in November to 86.7 this month.

On the Personal Financial component, 20 of the 21 groups IBD/TIPP tracks scored in optimistic territory. Nineteen groups increased, while two declined slightly, as a separate IBD/TIPP Financial Stress Index, intended to gauge whether Americans are in financial difficulty or not, posted its lowest level ever.

On the Federal Policies component, nine of the 21 demographic groups tracked were above 50. Twelve groups rose, while nine declined. This component measures how Americans feel about how well the federal government is doing its job.

“Change is often a tonic, and that’s especially true in politics,” said Terry Jones, associate editor of Investor’s Business Daily. “While we are seeing some slight negative shifts, the Index overall is moving in an overwhelmingly positive direction -- one that we have not seen in years. Americans seem to have faith that President-elect Donald Trump can bring major beneficial changes to the economy, leading to higher growth and faster rising incomes.”

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.

For more information, go to www.tipponline.com . To license the IBD/TIPP Poll, please contact: IBDlicensing@investors.com .

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