Headline Index Jumps 3.0 Points to 45.5, the Best Monthly Gain Since November 2024, as the Six-Month Outlook Climbs Across All 21 Demographic Groups
Consumer sentiment rebounded in July as the RealClearMarkets/TIPP Economic Optimism Index, the first monthly reading of U.S. consumer confidence, climbed to 45.5 from 42.5 in June, a 3.0-point (7.1%) gain. It is the sharpest monthly increase in the index since November 2024, breaking a three-month stretch of flat readings near April's lows.
Despite the rebound, the index has now remained below the neutral 50 mark for eleven consecutive months, keeping the nation in what we classify as the pessimism zone.
July's reading is 7.3% below the 306-month historical average of 49.1, indicating that even after this month's gain, economic optimism remains below its long-term norm.
Investor confidence rebounded sharply to 55.3 from 49.4 in June, recovering above the neutral 50 mark after slipping below it last month for the first time since June 2024. Non-investor optimism also rose, to 40.8 from 39.1. The confidence gap widened from 10.3 to 14.5 points as the most market-exposed Americans returned decisively to positive territory.
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 1,473 adults for the July index from June 29 to July 2. The online survey was conducted using TIPP's panel network. The margin of error is ±2.8 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 July, all three rose, with gains led by the Six-Month Economic Outlook, which posted its largest monthly jump in more than a year.
- The Six-Month Economic Outlook, which measures how consumers perceive the economy's prospects in the next six months, climbed 13.5%, from 37.1 in June to 42.1 in July, its highest reading in seven months. All 21 demographic groups tracked by RCM/TIPP recorded higher Outlook scores this month.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, rose 4.2%, from 50.1 in June to 52.2 in July, its strongest reading since February and its clearest move above neutral in five months.
- Confidence in Federal Economic Policies, a proprietary RCM/TIPP measure of views on the effectiveness of government economic policies, rose 4.7%, from 40.2 in June to 42.1 in July, marking the second consecutive monthly gain for this component.
RCM/TIPP also releases a companion measure, the Financial-Related Stress Index, the only monthly metric tracking Americans' financial stress. The index fell 1.5 points, or 2.3%, from 64.3 in June to 62.8 in July, reversing a portion of June's rise as financial strain eased for 17 of the 21 demographic groups we track.
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. July's reading of 62.8 exceeds the long-term average by 3.7%, signaling that although financial stress has eased for a second month out of the last three, it remains elevated above its historical norm.
“It's easily forgotten that all wars are world wars given the interconnected nature of the global economy. My hope is that the uptick in the RCM/TIPP Index signals growing confidence that production will rise as a consequence of what will hopefully be an end to the fighting in the Middle East,” said John Tamny, the editor of RealClearMarkets.
“July's data show the first meaningful step up in consumer sentiment in nearly a year,” said Raghavan Mayur, president of TechnoMetrica. “The headline index gained 3.0 points, its strongest monthly move since November 2024, and the improvement was remarkably broad. Every one of the 21 demographic groups we track saw its Six-Month Economic Outlook rise, and financial stress eased for 17 of them. Investors, who had slipped below neutral in June, rebounded above 55, leading the recovery. Personal financial outlook strengthened to 52.2, its firmest footing above the neutral line in five months. Still, the index remains below 50 for an eleventh consecutive month, and lower-income households and younger adults did not participate in July's rise. The rebound is real. Whether it holds is the question next month will answer.”
Economic Optimism Index Breakdown
This month, seven 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 two in June, three in May, and three in April. Seventeen groups improved on the index, compared to nine in June, nine in May, and one in April.
For the Six-Month Economic Outlook component, three of the 21 groups tracked by RCM/TIPP scored in optimistic territory, compared to one in June, one in May, and two in April. Economic Outlook sentiment improved for all 21 groups, compared to nine in June, eight in May, and two in April.
For the Personal Financial component, thirteen of the 21 groups tracked by RCM/TIPP were optimistic, compared to nine in June, ten in May, and eight in April. Sixteen groups rose compared to nine in June, thirteen in May, and three in April.
For the Federal Policies component, four of the 21 groups exceeded 50.0, compared to two in June, May, and April. Fifteen groups rose compared to nine in June, twelve in May, and zero in April.
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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