IBD/TIPP Economic Optimism index falls to 41.6. from 47.4 last month

• Prior month 47.4
• IBD/TIPP optimism index falls to 41.6 from 47.4 last month
• Six-month outlook falls to 34.6 from 41.6. This is the lowest level in 6 months
• Personal financial index 50.1 versus 55.3 last month
• Confidence in the federal economic policies falls to 40.0 from 45.3 last month. This is the lowest level since November

Weak. A reading below 50% is pessimistic.

The IBD/TIPP Economic Optimism Index, reported a 12.2% decline in economic optimism in May, falling to 41.6 from April's 47.4. This marks 21 consecutive months in negative territory, with readings below 50 indicating pessimism. The Six-Month Outlook component experienced a significant 16.8% drop, reflecting concerns about the economy's prospects in the coming months.

The Presidential Leadership Index and National Outlook Index also saw notable declines, while financial stress remains high. The Presidential Leadership Index fell by 8.0%, returning to negative territory at 46.3. The National Outlook Index decreased by 10.6%, moving from 46.1 in April to 41.2 in May.

Inflation concerns are prevalent, with 91% of consumers worried about its impact. Factors such as the collapse of banking institutions, potential debt ceiling issues, and global economic instability contribute to shaken consumer confidence. As a result, President Biden's popularity has taken a hit, with all his numbers now in negative territory, which could impact his re-election chances.

From Ed Carson IBD's News Editor:

“After a few months of increasing economic optimism, the May indexes are a bit concerning, particularly the Six-Month Outlook. In the past, deep swings in this component have signaled the start or end of a recession. This month, we saw the component drop 16.8%. With 91% of consumers worried about inflation, this is definitely a data point to track moving forward.”

The IBD/TIPP Economic Optimism Index is a monthly measure of consumer sentiment in the United States, created as a collaboration between Investor's Business Daily (IBD) and TechnoMetrica Market Intelligence (TIPP). The index aims to gauge the public's outlook on the U.S. economy by evaluating three key components:

The index is based on survey responses from a nationally representative sample of U.S. households. A score above 50 indicates optimism, while a score below 50 suggests pessimism. The IBD/TIPP Economic Optimism Index is closely watched by economists, policymakers, and investors as it can provide valuable insights into consumer sentiment and potential trends in consumer spending, which is a significant driver of economic growth in the United States.

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