Donald Trump’s presidential victory has catapulted U.S. consumer confidence to its highest level in a decade, according to TechnoMetrica’s Economic Optimism Index.
The rise in consumer confidence largely reflects the increased optimism among Republicans and Independents regarding economic conditions in the country in the wake of Trump’s election.
The IBD/TIPP Economic Optimism Index, a collaboration of Investor's Business Daily and TechnoMetrica Institute of Policy and Politics, rose 3.4 points to 54.8, the indicator’s best performance since November 2006, when the indicator registered a reading of 55.7.
The index gauges how confident consumers, workers and investors are in the pace and direction of the U.S. economy. As with all of IBD/TIPP's proprietary monthly indexes, a reading above 50 signals optimism, below 50 pessimism.
“The surge in consumer confidence is primarily due to a collective sense of relief among Americans over the conclusion of the contentious 2016 presidential election season, as well as a feeling of hope regarding the prospect of a new administration taking office,” the report said.
“After enduring months of a highly contentious presidential race, consumers are ecstatic that the election is finally over. In addition, Donald J. Trump’s election victory has stimulated optimism among many consumers, primarily Republicans and Independents, eager for economic and political change,” the report said.
“We found that the positive “Trump effect” on the Index is approximately eight points. Further, positive developments in the labor market may also have helped boost economic optimism. According to the most recent jobs report from the Labor Department, the economy added 178,000 jobs in November, while the unemployment rate fell to 4.6%, from 4.9% last month.”
Meanwhile, a majority of Americans believe that the U.S. economy is improving for only the second time this year. Overall, nearly three in five Americans, or 57%, believe that the U.S. economy is improving, while 41% say it is not improving.
In the latest survey, Republicans, millennials between the ages of 18 and 24, and males displayed the greatest optimism regarding the U.S. economy. Further, consumer confidence improved across 18 demographic groups during the last month. However, Democrats, Hispanics, African Americans and those earning an income of less than $30,000 saw a dampening in economic optimism.
The Economic Optimism Index includes three key components. This month, all three of the index components improved.
- The 6-Month Economic Outlook, a measure of how consumers feel about the economy’s prospects in the next six months, climbed 4.1 points, or 7.9%, to 56.3. The sub-index was 32.1 when the economy entered the last recession in December 2007.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months gained 0.9 point, or 1.5%, to 59.8.
- Confidence in Federal Economic Policies, a proprietary IBD/TIPP measure of views on how government economic policies are working, improved 5.2 points, or 12.1%, to 48.3.
TechnoMetrica, a Ramsey, N.J. market research consultancy, uses a monthly telephone survey to collect the survey data, with a sample size of approximately 900 respondents.
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