Consumer sentiment held near its lows in June as the RealClearMarkets/TIPP Economic Optimism Index, the first monthly reading of U.S. consumer confidence, edged down to 42.5 from 42.6 in May, a marginal 0.1-point (0.2%) decline. The reading marks a third straight month near April’s lows, confirming that the index has settled into a holding pattern at a depressed level rather than rebounding.
The index has now remained below the neutral 50 mark for ten consecutive months, keeping the nation in what we classify as the pessimism zone.
June’s reading is 13.4% below the 305-month historical average of 49.1, underscoring that economic optimism remains well below its long-term norm.
Investor confidence fell to 49.4 from 53.2 in May, slipping below the neutral 50 mark for the first time since June 2024, while non-investor optimism rose to 39.1 from 37.7. As a result, the confidence gap narrowed sharply from 15.5 to 10.3 points, as the most market-exposed Americans, usually the most upbeat segment, turned notably more cautious.
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 1,589 adults for the June index from May 26 to 28. The online survey was conducted using TIPP’s panel network. The margin of error is ±2.7 percentage points.
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 June, the picture was again mixed: one fell further, one held near neutral, and one ticked higher.
- The Six-Month Economic Outlook, which measures how consumers perceive the economy’s prospects in the next six months, declined 1.9%, from 37.8 in May to 37.1 in June, its lowest reading in two years, last seen in June 2024.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, held near neutral, edging down 0.4% from 50.3 in May to 50.1 in June, still the only component anchored at the 50 line.
- Confidence in Federal Economic Policies, a proprietary RCM/TIPP measure of views on the effectiveness of government economic policies, rose 1.0%, from 39.8 in May to 40.2 in June, the only one of the three components to gain ground this month.
RCM/TIPP also releases a companion measure, the Financial-Related Stress Index, the only monthly metric tracking Americans’ financial stress. The index rose 2.2 points, or 3.5%, from 62.1 in May to 64.3 in June, giving back much of the relief recorded the prior month.
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. June’s reading of 64.3 exceeds the long-term average by 6.3%, signaling that financial stress, having reversed much of May’s decline, remains well above its historical norm.
“Consumers are producers first and foremost, which means the stall is telling us something about stateside production. With the latter a natural and booming aspect of the American experience, a stalling indicator of confidence will require the wise to look toward government to see what it's doing to restrain what's thankfully difficult to restrain,” said John Tamny, the editor of RealClearMarkets.
“June tells the story of an economy stuck in low gear rather than one in freefall,” said Raghavan Mayur, president of TechnoMetrica. “For a third straight month, the headline index barely moved, settling into the low 40s. But the calm is uneven. The Six-Month Economic Outlook fell again to 37.1, its weakest level in two years, showing that Americans’ worries about the months ahead have not lifted. Financial stress, which dropped sharply in May, climbed back as 18 of the 21 demographic groups we track reported more strain. And for the first time since June 2024, investors, typically the most confident segment, slipped below the neutral 50 mark, narrowing their long-standing advantage over non-investors. The lone bright spot was a modest uptick in confidence in federal economic policies. Americans are holding steady, but the footing beneath that calm is getting softer.”
Economic Optimism Index Breakdown
This month, two of the 21 demographic groups tracked by RCM/TIPP, the youngest adults (18-24) and Republicans, are in positive territory, with scores above 50 on the Economic Optimism Index. For comparison, there were three in May, three in April, and six in March. Nine groups improved on the index, compared to nine in May, one in April, and seven in March.
For the Six-Month Economic Outlook component, one of the 21 groups tracked by RCM/TIPP scored in optimistic territory, compared to one in May, two in April, and four in March. Economic Outlook sentiment improved for nine groups, compared to eight in May, two in April, and six in March.
For the Personal Financial component, nine of the 21 groups tracked by RCM/TIPP were optimistic, compared to ten in May, eight in April, and 13 in March. Nine groups rose compared to 13 in May, three in April, and six in March.
For the Federal Policies component, two of the 21 groups exceeded 50.0, the same as in May and April, compared with five in March. Nine groups rose compared to 12 in May, zero in April, and eight in March.
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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