Confidence Hits 18-Month High With Recovery Lifting All Boats
BY BRIAN MITCHELL
INVESTOR'S BUSINESS DAILY
Americans' faith in the economy rose for a third straight month to a height not seen since June 2002.
The IBD/TIPP Economic Optimism Index rose 2.9 points, or 5.2%, to 58.8 in December, an 18-month high.
It was the index's biggest gain since April's 7.6-point wartime boost. Over 50 means optimism.
"Americans are very bullish on the economy this month. We have not seen such a positive feeling at least for the past year and a half," said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner.
"Across the board, Americans share the feeling," Mayur said. "The positive outlook for the job market is helping boost the sentiment. What we are seeing is the impact of four months of job creation that is lessening fears of future job losses."
The IBD/TIPP Economic Optimism Index tracks well with confidence gauges put out later each month by the University of Michigan and the Conference Board.
The index is based on a national poll of 905 adults from Dec. 1-7. The margin of error is plus-minus 3.3 percentage points.
Image: Economic Optimism Index
All three of the index's components rose in December:
The Six-Month Economic Outlook improved the most, rising 4.3 points to 60.8, a 21-month high.
The Personal Financial Outlook climbed 1.5 points to 62.8, also an 18-month high.
The Federal Policies component rose 3.1 points to 53.0, above 50 for the first time since July. It hit its nadir under President Bush (47.4) as recently as September.
The IBD/TIPP Presidential Leadership Index also ticked up slightly in December, rising 0.2 point to 54.1. It was the index's second gain after a six-month slide.
Bush actually lost 1.6 points on favorability, but gained 1.5 points on job approval and 0.9 point on leadership.
The Presidential Leadership Index rose for 12 of the 21 key demographic groups that the IBD/TIPP poll tracks.
Bush fared best with Republicans (87.4), rural Americans (61.9), households with incomes of $50,000-$75,000 (61.1), households with incomes over $75,000 (59.9) and the 25-to-44 age group (59).
Bush did poorly with Democrats (27.9), Blacks/Hispanics (39.9), the Northeast (42.9), the 18-to-24 group (44.7) and households making under $30,000 (46.2).
But economic optimism rose among all groups, which can only help Bush.
"If there is serious doubt about the future of the economy, then (the 2004 presidential election) will be another nail-biter, and Bush could easily lose," said Larry Sabato, professor of government at the University of Virginia.
"Bush does not have that much time, because once we move into the general election period (next summer), people believe nothing they hear," Sabato said. "That's the modern cynicism."
Four groups advanced over five points. They were households with incomes of $30,000-$50,000 (5.9), the Midwest (5.9), the West (5.3), and blacks/Hispanics (5.1).
Digging deeper, suburban households' optimism shot up 5.8 points to 62.9. Urbanites were up 1.4 points to 56.0. Rural households rose 2 points to 58.8.
Investors' confidence rose 3.3 points to 62.5, while noninvestors improved by 2.3 points to 56.2.
Men at 61.1 were more optimistic than women at 56.8, but women's sentiment rose more in December, up 3.9 compared with 1.9 for men.
Republicans remain the most upbeat at 73.6, up from 71.4. Democrats were dour, but less so, rising 2.9 points to 48.2.
Independents climbed 3.8 points to 57.5. Those swing voters have risen 8.2 points from September's low of 49.3.
Just 17% of those polled say they fear a family member will lose a job in the next 12 months. That's the lowest since the question was first asked in December 2001.
The National Outlook Index rose 1.1 points to 51.9. It improved on economic optimism, presidential leadership, quality of life, standing in the world and the country's direction. Only morals and ethics fell, by 1.5 point to 38. 5.
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