The RealClearMarkets/TIPP Economic Optimism Index, a leading national survey of consumer sentiment, fell 10.1% in December to 40.0. The index has remained in negative territory for 28 consecutive months now.
The RCM/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. From February 2001 to October 2023, TIPP released this index monthly in collaboration with its former sponsor and media partner, Investor’s Business Daily.
RCM/TIPP surveyed 1,464 adults from November 29 to December 1 for the December index. The online survey utilized TIPP’s network of panels to obtain the sample.
The index and its components range from 0 to 100. A reading above 50.0 signals optimism, and a reading below 50.0 indicates pessimism. 50 is neutral.
The RCM/TIPP Economic Optimism Index has three key components. In December, all three components declined.
- The Six-Month Economic Outlook, which measures how consumers perceive the economy's prospects in the next six months, dropped from 39.1 in November to 34.3 in December, marking a 12.3% decrease. In October, this component had posted 28.7, its lowest reading since the index debuted in February 2001.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, declined by 6.6% from its previous reading of 53.0 to 49.5 this month. By undercutting the neutral reading of 50.0, this component has now returned to negative territory.
- Confidence in Federal Economic Policies, a proprietary RCM/TIPP measure of views on the effectiveness of government economic policies, fell from 41.5 in November to 36.1, reflecting a 13.0% change.
Economic optimism among investors dropped 21% from 58.1 in November to 45.8 in December, while it rose by 4% among non-investors, from 36.2 in November to 37.5 in December.
RCM/TIPP also releases our companion index, called the RCM/TIPP Financial-Related Stress Index, the only metric to track the financial stress felt by Americans monthly.
The Financial-Related Stress Index ticked down by 0.1 points, or 0.1%, moving from 69.1 in November to 69.0 in December. Recently, in October, the metric recorded 70.5, its highest reading since December 2008, when it stood at 71.0.
The higher the number, the more stress. Readings above 50 signal increased stress, while those below 50 indicate lower stress, with 50 considered neutral. The last time the index posted below 50.0 was before the onset of the pandemic in February 2020, when it stood at 48.1.
"The quickest path to falling prices is a growing number of 'hands' and machines participating in the production of goods and services. In 2020, global cooperation built up over many decades was eviscerated to varying degrees. The speculation here is that the RCM-TIPP Index reflects this truth to this day as consumers continue to suffer a global suffocation of economic freedom. Inflation is a currency phenomenon, and a bad one. In this case we have high prices born of a fractured global trading system. The hope is that the Index reflects a rebuild of what was needlessly broken in the coming months and years," said John Tamny, the editor of RealClearMarkets.
“The national debt is poised to cross $34 trillion before the end of 2023, adding one trillion dollars in under 100 days. Most Americans are concerned about the sustainability of this trajectory. The high interest rates are also hurting Americans and sapping their confidence,” said Raghavan Mayur, president of TechnoMetrica, who directed the survey. “Fifty percent of respondents in the survey believe we are in a recession, and 64% believe the economy is not improving.”
Economic Optimism Index Breakdown
This month, only two of the 21 demographic groups we track, including age, gender, race, and education, are in positive territory above 50 on the Economic Optimism Index. In contrast, there were six in November, one in October, and three in September. While 13 of the 21 groups dropped in December, eight improved.
For the Six-Month Economic Outlook component, only one of the 21 groups that RCM/TIPP tracks scored in optimistic territory, compared to five in November, none in October, and three in September. Economic Outlook sentiment improved for eight of the 21 groups, compared to 20 in November, none in October, and 14 in September.
For the Personal Financial component, ten groups that RCM/TIPP tracks were in optimistic territory compared to 11 in November, five in October, and 14 in September. Eight groups rose after 17 in November, two in October, and 19 in September.
For the Federal Policies component, only one of the 21 groups was above 50.0 compared to six in November, one in October, and four in September. Six groups rose vs. 20 groups in November, one in October, and 10 in September.
About TechnoMetrica/TIPP
TIPP is the polling unit of TechnoMetrica, a nationally renowned survey research and market research firm dedicated to providing clients with expert data-driven analysis to facilitate informed decision-making in their businesses. The TIPP Poll is considered the gold standard survey, having the unique distinction of being the most accurate presidential poll in the past five election cycles. The tippinsights unit provides editorials and commentaries on national and international issues, often appearing on the RealClearPolitics website.
About RealClearMarkets
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