IBD/TIPP Economic Optimism Index Perks Up In August

The IBD/TIPP Economic Optimism Index gained 2.3 points to a five-month high of 52.5 in August, rising back above its pre-election level.

XEconomic optimism perked up and the Dow Jones industrial average and S&P 500 hit record highs, even as Americans' approval of President Trump cratered to 32%, a new low.

The Economic Optimism Index remained above the neutral 50 level, signaling optimism for the 11th straight month, though spirits haven't returned to February's 12-year high of 56.4. That was Trump was in his honeymoon period and prospects for huge tax cuts and a massive boost in infrastructure looked brighter.


The Economic Optimism Index is a composite of three major subindexes that track views of near-term economic prospects, the outlook for personal finances over the coming six months and views of how well government economic policies are working.

In August, the six-month personal financial outlook index tacked on two-tenths of a point to 60.2 as the Dow Jones industrial average eclipsed the 22,000 mark.The measure of confidence in federal economic policies scooted up 5.1 points to 47.3. The index had crept into optimistic territory for the first time in a decade in February, before the emergence of TrumpCare. It may be more than coincidence that bounce in the federal policy gauge came as the Senate GOP's plan to repeal ObamaCare appeared to collapse.The gauge of the six-month economic outlook added 1.5 points to 49.5, signaling modest pessimism for the second straight month.

The poll, which included 904 respondents, was conducted July 28-Aug. 5. That period included a one-day, nationwide 50,000 hiring spree by Amazon.com (AMZN) and an employment report that saw the jobless rate revisit a 16-year low of 4.3%. Amazon shares also fell after earnings missed expectations on July 26, helping to fuel choppy Nasdaq performance during the IBD/TIPP survey week.

IBD'S TAKE: Apple moved back into a buy zone Monday after initially clearing the flat-base entry last week on strong earnings and guidance. Check out IBD's Stocks Near A Buy Zone to see the charts of other top stocks that may be primed for gains.

Economic sentiment seems more in line with the subdued hourly wage growth reported by the Labor Department, rather than with the strong top-line job gains — 209,000 in July.

Meanwhile, the National Federation of Independent Business said its Small Business Optimism Index demonstrated strength, rising 1.6% to 105.2 in July, driven by gains in job openings, future hiring plans and sales expectations.

The group said that 60% of firms sought to add workers last month, but 87% of that group said they had a hard time finding qualified workers. Capital spending plans stood out in July, but not in a good way, dipping slightly and remaining just average relative to historical trends.

"Small business owners are waiting to see what happens on tax reform before they make big capital improvements or acquisitions," said NFIB President and CEO Juanita Duggan.

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