General News
Wednesday, March 13, 2002
Americans Getting More Upbeat As View Of Economy Brightens
BY PETER BENESH
INVESTOR'S BUSINESS DAILY
Spring is in the air - and in the economy and the nation's outlook. Americans' optimism and confidence jumped between February and March, confirming a trend that began right after Sept. 11.
The monthly IBD/TIPP Economic Optimism Index jumped to a record 62.9 in March from 60.4 in February and 61.1 in January.
The index, from a poll of 921 adults taken nationwide from March 5-11, measures three categories of economic sentiment: the six-month outlook for the economy, six-month outlook for personal finances and how people view federal economic policies.
In general, an index above 50 signals optimism, while an index below 50 shows pessimism.
"What we are seeing is a healthy confirmatory spike," said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence that conducts the poll each month. "Americans are more positive now about their economic futures than at any time in the past 12 months."
Mayur says the bullish rise in the index is a positive sign for the economy, which officially has been in recession since last March.
Recession Over?
"Today we confirm our view, first stated in early December, that the end of the recession is in sight," Mayur said.
"We are bullish about the recovery and believe it's under way. Two-thirds of the economy is driven by consumer spending, and consumers are most confident now."
Recent data - ranging from stronger-than-expected fourth-quarter GDP and productivity numbers to continued solid growth in consumer spending - suggest that the economy's recession has indeed ended.
If so, it's the shortest, mildest recession on record.
The latest IBD/TIPP survey bolsters that view. In March, the driving force behind the Economic Optimism Index's rise was the component that measures the six-month outlook for the national economy.
That index surged 11% to a record 64.8 in March from 58.3 in February.
Bush's High Grades
The index of optimism about federal policies rose to 60.4 from 58.9, a 2.5% gain, while the index of six-month expectations for personal finances fell a tiny 0.7% to 63.4 from 63.9, just off its high.
Americans seem to credit President Bush for the improvements.
"More than one in two Americans (55%) give Bush a grade of either excellent or good on handling the economy," Mayur said.
"While eight in 10 (83%) Republicans give high grades, close to a third of Democrats (30%) and half of Independents (52%) think he is doing a good job at handling the economy," he said.
Americans also seem happy with the Fed's 11 interest rate cuts in the past year and Congress' strong support of the war on terror.
The results suggest a "reinforcing virtuous cycle," said Mayur.
"Economic data, analysts' positive opinions and statements by Alan Greenspan buoy up consumers," he noted. "Consumer spending regenerates business investment, and that validates the data and analysis."
Close to Ground Zero, Paul McNulty sees evidence of the turnaround.
After 15 years as an institutional broker in Toronto, the Brooklynite, 52, has returned home to launch a new career in the investment field.
"The stock market is a six-month forecaster for the future," he said.
"I lost a brother-in-law on 9-11. Now I see New York is coming back. People are honking their horns again. For New York that's a sign things are returning," he said.
For Travis Whitman, a shop foreman for Cannon Safe Inc. in San Bernardino, Calif., better times ahead will build on the good times he's already experienced.
The firm makes safes for firearms storage. Now 24, he joined the company at 17.
"My wife and child and I have a house, two cars, a 401(k) and we eat. I go to work a happy man," he said.
"Because of the way the company's growing, my personal financial outlook this year is great," he said. "I have been getting productivity bonuses. People tell me I look successful."
He said Bush "is good for the economy. He promotes good work habits."
Whitman sees a link between the war and the economy.
"When troops have a good leader, they'll come home proud of what they did. People who are proud will make their country successful," he said.
The picture is a different in Clintonville, Wis., where Ryan Rockey works at two jobs, as a waitress and home cleaner.
The 19-year-old sees the economy in her town of 4,500 at a bottom. Layoffs have hit hard.
"I look through the shoppers' guides and see a lot of personal ads from people looking for odd jobs," she said. "Nobody's hiring yet."
Still, she's optimistic. In six months she expects to be on her own and making more money.
"I have a 15-month-old daughter, so there's not much choice," she said.
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Also In Wednesday's investors.com:
No Recovery: Weakening sales and accounting issues prolong the agony for telecom equipment makers.
IBD/TIPP Poll: The optimism index is at a new high on hopes for a recovery and growing faith in federal policies.
Tuesday's Stocks: In the context of the Nasdaq's nearly 14% rally over the prior 12 sessions, Tuesday's pullback didn't look extreme.
IPO Market: Anteon International is the latest defense technology firm to stage a successful IPO in recent months.
Mutual Funds: David Hyun of Alger Spectra Fund sees hope for big-cap growth stocks.
Issues & Insights: None of the energy proposals look like they'll pass the Senate.
The New America: Neither terror nor recession can keep Dime Community Bancshares from steady financial gains.
Investor's Corner: Quality stocks still command fairly high share prices.
Heeding The Market: This page shows how "The Big Picture" column recognized the signs of weakness right as the bear market began.
IBD Calendar: A schedule of periodic features, data screens and special reports appearing in IBD.
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