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Americans Remain Optimistic About The Economy

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Americans remain optimistic about the economy, according to the latest IBD/TIPP Economic Optimism Index.

This index measures consumer sentiment based on current economic conditions. The index remains consistently strong at 51.3, on par with where it finished in May.

An index reading above 50 indicates economic optimism while below illustrates a pessimistic outlook. A score in the optimistic category signals increasing demand for goods and services which ultimately drives GDP growth.

The “Trump bump” is corroborated by IBD/TIPP numbers above 50; signaling a trend of economic tailwinds over the past nine months. The June reading of 51.3 exceeds the twelve-month average 51.

Strong economic performance is further evidenced by market performance during Trump’s firth 100 days, during which the S&P 500 grew by 5.32 percent and the Dow Jones Industrial Average grew by 6.12 percent according to Market Watch.

Trump’s promises to “unleash American energy” and give a “major haircut” to Dodd-Frank are causing the energy and financial sectors to outperform the already booming S&P 500. Energy grew by an average of 3.2 percent with financials following close behind at 3.1 percent.

Likewise, auspicious job reports are further moving the economy forward. Following Trump’s first 100 days, unemployment fell to 4.5 percent. In the absence of economic shocks, the Federal Reserve targets unemployment between 4.5-6 percent.

Economic performance during Trump’s term has been strong, and future outlook remains bright. The “Six-Month Economic Outlook,” which measures the direction consumers predict the economy will head, has increased by 3.2 percent month-over-month. “Personal Financial Outlook,” which measures consumer sentiment on ability to meet future financial commitments, has remained constant at 57.2, well above the threshold of 50 for positive economic outlook.

Surprisingly, despite strong market performance, job reports, and positive economic outlook, “Confidence in Federal Economic Policies” reads inexplicably low at 45.4, down 3.6 percent from May.

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