The December reading of 47.9 marks a solid 9% monthly gain.
Consumer sentiment improved in December, as the RealClearMarkets/TIPP Economic Optimism Index, the first monthly read on U.S. consumer confidence, rose from 43.9 in November to 47.9, a robust 4.0 points or 9.1 percent gain. Still, the index stayed below the neutral 50 level for the fourth straight month, keeping the nation in what we classify as the pessimistic zone.
December’s reading of 47.9 is 2.5 percent below the 299-month historical average of 49.1, which shows that confidence is strengthening but not fully restored.
Investor confidence improved 2.2% (1.3 points) to 59.9 in December, while non-investor confidence gained 9.1% (3.8 points) to 41.8. The confidence gap between investors and non-investors widened from 20.6 to 18.1 points.
The RCM/TIPP Economic Optimism Index has a strong track record of predicting the confidence indicators later released 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 1,483 adults for the December index from November 25 to November 29. The online survey used TIPP's panel network to obtain the sample.
The index is measured on a scale from 0 to 100. Readings above 50 indicate optimism, while those below 50 signal pessimism. A score of 50 is neutral.
The RCM/TIPP Economic Optimism Index has three key components. In December, all of them improved.
- The Six-Month Economic Outlook, which measures how consumers perceive the economy's prospects in the next six months, gained 11.0%, from 40.0 in November to 44.4 in December.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, rose 6.7% from its previous reading of 50.6 in November to 54.0 this month.
- Confidence in Federal Economic Policies, a proprietary RCM/TIPP measure of views on the effectiveness of government economic policies, increased to 45.4 in December from 41.1 in November, a 10.5% gain.
RCM/TIPP also releases a companion measure, the Financial-Related Stress Index, the only monthly metric tracking Americans’ financial stress. The index dropped 1.0 point (1.5%) from 65.2 in November to 64.2 in December, echoing lesser financial stress among Americans.
The higher the number, the more stress. Readings above 50 signal increased stress, while those below 50 indicate lower stress. A reading of 50 is 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 has averaged 60.5 since December 2007. November’s reading of 64.2 exceeds this by 6.2%, signaling heightened financial stress relative to the long-term average.
“It can't be said enough that consumers are producers, so it's always exciting to see confidence up. It's a proxy for production being up,” said John Tamny, the editor of RealClearMarkets.
“Americans’ economic confidence improved significantly in December,” said Raghavan Mayur, president of TechnoMetrica, which conducted the survey. “While concerns about inflation and the impact of tariffs linger, with food prices standing out as the leading economic worry, the ending of the government shutdown is having a positive impact on the national psyche. However, an over-cautious monetary policy is paralyzing weaker sectors of the economy, such as housing, and dampening public confidence.”
Economic Optimism Index Breakdown
This month, six of the 21 demographic groups tracked by RCM/TIPP, including age, gender, race, and education, are in positive territory, with scores above 50 on the Economic Optimism Index. For comparison, there were four in November, six in October, and seven in September. All 21 groups improved on the index, compared to none in November, nine in October, and three in September.
For the Six-Month Economic Outlook component, five of the 21 groups tracked by RCM/TIPP scored in optimistic territory, compared to three in November, four in October, and five in September. Economic Outlook sentiment improved for 20 groups, compared to two in November, four in October, and nine in September.
For the Personal Financial component, 12 of the 21 groups tracked by RCM/TIPP were optimistic, compared to 10 in November, 18 in October, and 12 in September. Nineteen groups rose compared to one in November, 17 in October, and six in September.
For the Federal Policies component, five of the 21 groups are above 50.0, compared to three in November, six in October, and five in September. All 21 groups rose compared to none in November, eight in October, and one 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 six 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
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