Research

ECONOMIC INDEX DROPS, BUT YOUTH STILL SHOWS OPTIMISM

Technometrica’s  IBD/TIPP Economic Optimism Index lost the modest gains it made in February, dropping 2 points, or 4.5%, to reach 42.5 (vs. 44.5 in February). March’s reading represents the third-lowest reading in the Economic Optimism Index’s 86-month history, and at 4.4 points below its prior 12-month average and 10 points below its all-time average, it is at its lowest reading in nearly two and a half years. March represents the 12th consecutive month since March 2007 that the index has been in the pessimistic zone.

The Index has three key components, all three of which fell in March:

  • The six-month economic outlook fell 2.3 points, or 6.6%, to reach 32.8.
  • The six-month personal financial outlook component lost three points, or 5.2%, to reach 54.7.
  • The federal policies component fell 0.7 points, or 1.7%, to reach 39.9.

“Consumer confidence fell again this month, amid persistently high fuel prices, which are reverberating around the economy,” said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner. “That, along with the continued slide of the dollar, weaker employment figures, the credit and housing crunch, as well as other economic metrics coupled with pessimistic economic news, and economic electioneering are not helping to boost American’s confidence in the economy."

The data for the March 2008 poll was collected March 3–9 with 902 respondents. The margin of error is +/-3.3 percentage points at the 95% confidence level.

This month, two of the 21 demographic groups that IBD/TIPP tracks were above 50 on the Economic Optimism Index (18 to 24 year olds, 59.9 and republicans, 53.2) and overall economic optimism improved among five of the 21 groups, while falling for the rest. The five groups with improved scores were 18 to 24 year olds (+3.6), those with household incomes above $75k (+3.4), republicans (+1.0), those with household incomes between $50K and $75K (+0.4) and investors (+0.1).

The largest losses occurred among those with household incomes below $30K per year (-9.2), those with household incomes between $30K and $50K (-7.0), non-investors (-4.6) and democrats (-4.0); the lowest scores belonged to democrats (35.9), those earning less than $30K per year (36.6) and independents (38.2). On the Economic Outlook component, none of the groups IBD/TIPP tracks scored in optimistic territory. In fact, the highest scores were 44.7 (among 18 to 24 year olds), 40.7 (among republicans), and 38.6 (among black and Hispanic Americans). The most pessimistic scores belong to independents (26.8), those earning between $30K and $50K (28.3) and 45 to 64 year olds (28.5).

Overall, just three of the 21 groups that IBD/TIPP tracks showed any improvement on this index, led by those with household incomes above $75K per year (+4.5), who were followed by small increases among those aged 65 or above (+0.7) and Investors (+0.1). On the Personal Financial component, 17 of the 21 groups that IBD/TIPP tracks scored a 50 or above, with four of those improving and 13 falling. On the Federal Policies component, just two of the 21 demographic groups that IBD/TIPP tracks were above 50—18 to 24 year olds (63.3) and republicans (57.3)—while the rest were below. The highest Federal Policy index score belonged to republicans (63.3) while the lowest belonged to democrats (29.0).

Source: Technometrica Market Intelligence