Personal Financial Outlook Drops 4.6% as Overall Index Falls 2.7%
Consumer sentiment edged lower in March as the RealClearMarkets/TIPP Economic Optimism Index, the first monthly reading of U.S. consumer confidence, declined to 47.5 from 48.8 in February, a 1.3-point (2.7%) drop.
The index has now remained below the neutral 50 mark for seven consecutive months, keeping the nation in what we classify as the pessimism zone.
March’s reading is 3.3% below the 302-month historical average of 49.1, underscoring that economic optimism continues to run slightly below its long-term norm.
Investor optimism edged down 0.3% to 59.6, while non-investor confidence dropped sharply, falling 6.4% to 41.0. As a result, the confidence gap widened from 16.0 to 18.6 points, highlighting a growing divide in economic outlook between investors and non-investors.
The RCM/TIPP Economic Optimism Index has a strong track record of anticipating the consumer 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 1,456 adults for the March index from February 24 to February 27. The online survey was conducted using TIPP's panel network.
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, and in March, all three declined.
- The Six-Month Economic Outlook, which measures how consumers perceive the economy's prospects in the next six months, fell 1.8%, from 43.8 in February to 43.0 in March.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, dropped 4.6% from its previous reading of 56.9 in February to 54.3 this month.
- Confidence in Federal Economic Policies, a proprietary RCM/TIPP measure of views on the effectiveness of government economic policies, slipped to 45.1 in March from 45.7 in February, a 1.3% drop.
RCM/TIPP also releases a companion measure, the Financial-Related Stress Index — the only monthly metric tracking Americans’ financial stress. The index rose 0.8 points, or 1.3%, from 61.6 in February to 62.4 in March, signaling increased financial strain 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. March’s reading of 62.4 exceeds the long-term average by 3.2%, signaling heightened financial stress.
“If you had told people a year ago that the RCM/TIPP would merely slip as President Trump jawboned the Supreme Court while massing an enormous U.S. military presence ahead of an invasion of Iran, they would have predicted a collapse in the indicator. That's my optimistic take on a declining number,” said John Tamny, the editor of RealClearMarkets.
“Consumer optimism slipped in March, driven largely by softer expectations for personal finances,” said Raghavan Mayur, president of TechnoMetrica. “Policy uncertainty following the Supreme Court’s tariff decision and rising geopolitical tensions weighed on sentiment. Still, moderating inflation is supporting purchasing power, economic growth remains resilient, and the labor market continues to show stability.”
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 eight in February, seven in January, and six in December. Seven groups improved on the index, compared to 18 in February, nine in January, and 21 in December.
For the Six-Month Economic Outlook component, four of the 21 groups tracked by RCM/TIPP scored in optimistic territory, compared to three in February, four in January, and five in December. Economic Outlook sentiment improved for six groups, compared to 11 in February, seven in January, and 20 in December.
For the Personal Financial component, 13 of the 21 groups tracked by RCM/TIPP were optimistic, compared to 13 in February, 19 in January, and 12 in December. Six groups rose compared to 18 in February, 13 in January, and 19 in December.
For the Federal Policies component, five of the 21 groups exceeded 50.0, compared with five in February, three in January, and five in December. Eight groups rose compared to 17 in February, seven in January, and 21 in December.
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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