Investor confidence gained by 9.7% in February, while overall optimism improved 3.4%.
Consumer sentiment brightened in February as the RealClearMarkets/TIPP Economic Optimism Index, the first monthly read on U.S. consumer confidence, rose from 47.2 in January to 48.8, a 1.6-point or 3.4 percent gain. The index stayed below the neutral 50 level for the sixth straight month, keeping the nation in what we classify as a pessimistic zone.
February’s reading of 48.8 is 0.66% below the 301-month historical average of 49.1, indicating that optimism remains slightly below the long-term average.
Investor sentiment improved 9.7% (5.3 points) to 59.8 in February, while non-investor confidence gained 0.7% (0.3 points) to 43.8. The confidence gap between investors and non-investors widened from 11.0 to 16.0 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 1,384 adults for the February index from January 27 to January 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 February, all three of them improved.
- The Six-Month Economic Outlook, which measures how consumers perceive the economy's prospects in the next six months, gained 1.2%, from 43.3 in January to 43.8 in February.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, rose 3.6% from its previous reading of 54.9 in January to 56.9 this month.
- Confidence in Federal Economic Policies, a proprietary RCM/TIPP measure of views on the effectiveness of government economic policies, improved to 45.7 in February from 43.5 in January, a 5.1% gain.
RCM/TIPP also releases a companion measure, the Financial-Related Stress Index, the only monthly metric tracking Americans’ financial stress. The index fell 1.3 points (2.1%) from 62.9 in January to 61.6 in February, reflecting lower 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. February’s reading of 61.6 exceeds the long-term average by 1.9%, signaling heightened financial stress.
“If you told people a year ago that there would be a trade war, $5,300 gold, and the U.S. dropping bombs inside Iran, among other things, most would have predicted a down year for all aspects of the U.S. economy. Despite the news and the noise, Americans continue to produce. It's quite the story,” said John Tamny, the editor of RealClearMarkets.
“Consumer optimism improved in February, driven largely by stronger expectations for personal finances,” said Raghavan Mayur, president of TechnoMetrica, which conducted the survey. “Inflation has moderated, supporting purchasing power. Economic growth remains solid, and the job market remains stable.”
Economic Optimism Index Breakdown
This month, eight 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 seven in January, six in December, and four in November. Eighteen groups improved on the index, compared to nine in January, 21 in December, and none in November.
For the Six-Month Economic Outlook component, three of the 21 groups tracked by RCM/TIPP scored in optimistic territory, compared to four in January, five in December, and three in November. Economic Outlook sentiment improved for 11 groups, compared to seven in January, 20 in December, and two in November.
For the Personal Financial component, 19 of the 21 groups tracked by RCM/TIPP were optimistic, compared to 19 in January, 12 in December, and 10 in November. Eighteen groups rose compared to 13 in January, 19 in December, and one in November.
For the Federal Policies component, five of the 21 groups exceed 50.0, compared with three in January, five in December, and three in November. Seventeen groups rose compared to seven in January, 21 in December, and none in November.
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.
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