The RealClearMarkets/TIPP Economic Optimism Index, a leading gauge of consumer sentiment, improved by 3.6% in September to 46.1, posting its 17-month high since May 2023. Since September 2021, the index has remained in negative territory for 37 consecutive months. September’s reading of 46.1 is 6.1% lower than the historical average 49.1.
Optimism among investors gained 1.0% from 52.4 in August to 52.9 in September, while it increased by 4.4% among non-investors, from 40.7 in August to 42.5 in September.
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 1,582 adults from August 28 to August 30 for the September 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 below 50.0 indicates pessimism. 50 is neutral.
The RCM/TIPP Economic Optimism Index has three key components. In September, all three components improved.
- The Six-Month Economic Outlook, which measures how consumers perceive the economy's prospects in the next six months, improved from 43.4 in August to 44.8 in September, marking a 3.2% gain. In October 2023, this component posted 28.7, its lowest reading since the index debuted in February 2001. The component has been below 50.0 in the pessimistic territory for 37 consecutive months since September 2021.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, increased by 2.7% from its previous reading of 51.8 in August to 53.2 this month. In January, the component had crossed above the neutral reading of 50.0. It remained above 50.0 in the positive territory for five consecutive months, only to drop below 50.0 in June. It bounced back above 50.0 in August and has remained positive.
- Confidence in Federal Economic Policies, a proprietary RCM/TIPP measure of views on the effectiveness of government economic policies, rose from 38.3 in August to 40.2 this month, reflecting a 5.0% gain. Similar to the outlook component, this component has been below 50.0 in the pessimistic territory for 37 consecutive months since September 2021.
The index eased 0.7 points, or 1.0%, from 67.6 in August, its eight-month high, to 66.9 in September.
The higher the number, the more stress. Readings above 50 signal increased stress, while those below 50 indicate lower stress, with 50 considered neutral. For context, 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 index’s historical average since December 2007 stands at 60.2. September's reading of 66.9 surpasses this historical average by 11.2%, indicating that Americans are experiencing approximately 11% higher financial stress levels than usual.
Notably, the index peaked at 70.5 in October 2023, marking its highest reading since December 2008 (71.0). Since then, it has declined for the better, reaching 66.9 in September.
“What a difference a month makes. In a month that began with 'recession' as a fait accompli, sentiment has shifted positive. Let's just say I trust sentiment in the marketplace exponentially more than I do backward-looking economic statistics,” said John Tamny, the editor of RealClearMarkets.
"Americans’ economic confidence has significantly improved in September. However, 86% are worried about inflation. Further, another 78% are concerned about a slowdown in the next 12 months. The share of respondents who think the U.S. is in a recession increased slightly to 47%, from 45% in August, while the share who believe the economy is improving rose from 28% in August to 29% in September," said Raghavan Mayur, president of TechnoMetrica, who directed the survey. "Financial stress decreased slightly in September. Inflation, food prices, gasoline prices, and government spending continue to threaten the U.S. economy.”
Economic Optimism Index Breakdown
This month, only seven of the 21 demographic groups we track, including age, gender, race, and education, are in positive territory above 50 on the Economic Optimism Index. For comparison, there were three in August, four in July, and two in June. Seventeen groups improved on the index, compared to 12 in August, 21 in July, and five in June.
For the Six-Month Economic Outlook component, only five of the 21 groups that RCM/TIPP tracks scored in optimistic territory, compared to two in August, three in July, and one in June. Economic Outlook sentiment improved for 16 of the 21 groups, compared to 16 in August, 19 in July, and 15 in June.
For the Personal Financial component, 14 of the 21 groups that RCM/TIPP tracks were optimistic compared to 13 in August, 13 in July, and 5 in June. Fourteen groups rose in August, compared to nine in August, 21 in July, and two in June.
For the Federal Policies component, only three of the 21 groups are above 50.0, compared to one in August, two in July, and one in June. Sixteen groups rose compared to four in August, 19 in July, and four in June.
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
RealClearMarkets (RCM) is a one-stop shop for market-related news, analysis, and commentary. RealClearMarkets collects and publishes business, finance, and economic content from across the ideological spectrum. Site features include Market Data, Off the Street Blogs, Quotes, Research Reports, Videos, Topics, and Facts & Fallacies.
RealClearMarkets falls underneath the umbrella of RealClear Media Group's(RCMG) brands, sites that span a spectrum of passions and interests. Visit realclearmediagroup.com today.
Comment
Show comments
Hide Comments
