Consumer Confidence Highest Since Pandemic Outbreak

Consumer Confidence Highest Since Pandemic Outbreak

The IBD/TIPP Economic Optimism Index posts its highest reading since the start of the pandemic.

Raghavan Mayur
Raghavan Mayur

The IBD/TIPP Economic Optimism Index, a leading national survey on consumer confidence, showed that consumer confidence improved for the third month in a row in March.

The index rose 2.2% in January, 3.6% in February, and 6.7% in March. It improved from 51.9 in February to 55.4 in March.

Before the start of the pandemic, the index was at 59.8 in February 2020.  Since March 2020, it weakened to its pandemic low of 44.0 in July.  This month the index is now at its highest point since February 2020.

This flagship Index has three key components, each equally weighted.  For the index and its components, a reading above 50.0 signals optimism, and below 50.0 indicates pessimism.

The Six-Month Economic Outlook, a measure of how consumers feel about the economy's prospects in the next six months, is computed from responses to the question:   In the next six months, do you think that economic conditions in the country will be better, worse, or about the same as now? The Six-Month Economic Outlook component increased by 7.5%, from 49.5 in February to 53.2 in March. The component is back into positive territory for the first time since October 2020.

The Personal Financial Outlook, a measure of how Americans feel about their finances in the next six months, is derived from answers to the question, "In the next six months, do you think that your personal financial situation will be better, worse, or about the same as now?"  The component increased from 56.5 in February to 58.0 in March, or 2.7% this month.

Confidence in Federal Economic Policies, a measure of views on how government economic policies are working, is calculated from answers to the question," How satisfied are you with the current federal economic policies meant to keep the economy going in the right direction?" The component rose 5.2 points from 49.7 last month to 54.9 this month -- a 10.5% increase and entered the positive zone above 50.

Though many are concerned about meeting day-to-day expenses, they are optimistic about the coming months' economic outlook.  The stimulus bill has already passed the House.  Vaccinations are also increasing.  26% of survey respondents said they had received at least one shot.

Party Divide

The economic optimism index for Democrats is 70.7, Republicans 39.9, and Independents 45.4.

Democrats have been rising since September 2020 for six months in a row, from 32.8 in September 2020 to 70.7 in March 2021.  The Democratic President inspires confidence in them.

Republicans dropped from a peak of 74.0 in October 2020 to 33.6 in February 2021. After the four-month slide, they halted the decline in  March 2021, improving to 39.9.

Our analysis shows that the economic optimism index of 16 of 21 demographic groups that we track are above 50.0, in positive territory, in March.  19 groups improved in March.

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