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RCM/TIPP Economic Optimism Index brightens in January


The RealClearMarkets/TIPP Economic Optimism Index, a leading gauge of consumer sentiment, gained 11.8% in January to 44.7. Despite the rise, the index remains in negative territory. It has remained in the pessimistic zone for 29 consecutive months now.

RealClearMarkets (RCM) is the new sponsor of the TIPP Economic Optimism Index.

The RCM/TIPP Economic Optimism Index is the first monthly measure of consumer confidence. It accurately predicts monthly changes, as reflected in other well-known surveys by The Conference Board and the University of Michigan.

Consumer spending drives two-thirds of the economy. Optimistic consumers spend money on automobiles, home improvements, new homes, and other large-ticket items.

RCM/TIPP Economic Optimism Index

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

The RCM/TIPP Economic Optimism Index has three key components. In January, all three components improved.

  • The Six-Month Economic Outlook, which measures how consumers perceive the economy’s prospects in the next six months, increased from 34.3 in December to 39.3 in January, marking a 14.6% increase. In October, this component had posted 28.7, its lowest reading since the index debuted in February 2001.
  • The Personal Financial Outlook, a measure of how Americans feel about their finances in the next six months, gained 11.1% from its previous reading of 49.5 to 55.0 this month. By crossing the neutral reading of 50.0, this component has now returned to positive territory.
  • Confidence in Federal Economic Policies, a proprietary RCM/TIPP measure of views on the effectiveness of government economic policies, rose from 36.1 in December to 39.8, reflecting a 10.2% improvement.
RCM/TIPP Economic Optimism Index Brightens In January

Party Dynamics

Democrats posted the highest confidence level in January, at 63.7, with a 7.6 points improvement.

Meanwhile, Republicans’ confidence gained 3.9 points to 31.3 this month. It had stayed in the pessimistic zone for 38 consecutive months since December 2020, after the 2020 presidential election.

Independents’ confidence has been in pessimistic territory for 46 months since April 2020, the month after the onset of the pandemic. Independents gained 2.1 points and posted 37.8 on the index in January.

RCM/TIPP Economic Optimism Index Brightens In January

Investor Confidence

RCM/TIPP considers respondents to be “investors” if they currently have at least $10,000 invested in the stock market, either personally or jointly with a spouse, either directly or through a retirement plan. We classified 33% of respondents who met this criterion as investors and 62% as non-investors. We could not ascertain the status of 5% of respondents.

Boosted by stock market gains in December, optimism among investors gained 20% from 45.8 in December to 54.9 in January, while it rose by 5% among non-investors, from 37.5 in December to 39.3 in January.

The economic optimism gap between investors and non-investors is 15.6 in January, widening from 8.3 in December.

RCM/TIPP Economic Optimism Index Brightens In January


Comparing a measure’s short-term average to its long-term average is one way to detect its underlying momentum. For example, if the 3-month average is higher than the 6-month average, the indicator is bullish. The same holds if the 6-month average exceeds the 12-month average.

In January, all three components are higher than their three-month moving averages. Furthermore, the three-month moving averages for all the components and the Economic Optimism Index are higher than the six-month moving average. As a result, the data shows a positive momentum.

RCM/TIPP Economic Optimism Index Brightens In January

Demographic Analysis

The number of groups in the positive zone indicates the breadth of optimism in American society. This month, five of the 21 demographic groups we track—such as age, income, education, and race—are above 50.0, indicating optimism on the Economic Optimism Index. Starting with three groups in January 2023, we saw steady improvement, peaking at nine groups in April and then a decline to return to one group in August. Since August, it has moved in the range of one to six. 19 of the 21 groups posted increased confidence in January compared to eight in December.

RCM/TIPP Economic Optimism Index Brightens In January


Inflation acts as a form of indirect tax on American households.

According to our survey, 84% are worried about inflation. One-half (50%) are very concerned, and another 34% are somewhat concerned.

Even though the CPI rate has declined from a 40-year high of 9.1% in June 2022 to 3.1% in November 2023, Americans continue to be hurt because real wages have not improved.

The Federal Reserve believes that long-run inflation of 2%, measured by the annual change in the price index for personal consumption expenditures, is most consistent with its maximum employment and price stability mandate.

We will cover inflation in greater depth after the upcoming release of the CPI this week.

RCM/TIPP Economic Optimism Index Brightens In January


Four in ten (43%) Americans believe we are in a recession, and another 24% are unsure. 33% believe we are not in a recession. Note that those who believe we are in a recession show a big drop in January, perhaps the impact of widespread media coverage suggesting that we may not have a recession.

RCM/TIPP Economic Optimism Index Brightens In January

In January, over one-half (58%) think the U.S. economy is not improving, while 30% believe it is improving.

RCM/TIPP Economic Optimism Index Brightens In January

Fiscal Profligacy

The national debt crossed $34 trillion last week. On average, the government has borrowed $250,000 for each American household and is paying upwards of $1 trillion annually in interest—more than it spends on the nation’s defense!

One downside of ballooning federal debt is that refinancing becomes challenging. Supply and demand in the bond market will drive interest rates. If there is a high supply of government bonds (due to high debt levels), interest rates may need to stay high to attract investors and ensure that the government can continue borrowing money.

Most Americans are concerned about the sustainability of this trajectory. The high interest rates are also hurting Americans and sapping their confidence.

Despite our positive report, the overall economic outlook and confidence are, at best, mixed. We anticipate a stagflationary economy in 2024. The risks on the downside outweigh those on the upside. Watch the real estate market, the stock market, and the job market, and see if Washington can pass spending bills.

Using an online survey, TIPP polled 1,401 adults nationwide from January 3 to January 5.

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TIPP Takes

Geopolitics, Geoeconomics, And More

1. Blinken To Meet Palestinian President After Warning Israel Death Toll ‘Too High’ – Al Arabiya

Secretary of State Antony Blinken was due to hold talks with the head of the Palestinian Authority, which Washington hopes could govern Gaza after Israel’s war with Hamas ends.

RCM/TIPP Economic Optimism Index Brightens In January

After meeting with Israeli Prime Minister Benjamin Netanyahu in Tel Aviv, the United States’ top diplomat said the country would continue supporting its ally. He called on Israel to do more to protect those trapped in the besieged Palestinian territory, saying the “daily toll on civilians in Gaza, particularly children, is far too high.”

2. Blinken Carries Arab Message To Israel: Keep Palestinian State Hope Alive – Reuters

Secretary of State Antony Blinken, on his latest mission to rein in the Gaza war, told Israeli leaders there was still a chance of winning acceptance from their Arab neighbors if they created a path to a viable Palestinian state.

RCM/TIPP Economic Optimism Index Brightens In January

On his fourth trip to the region since October, Blinken said he would share what he had heard in two days of talks with Jordan, Qatar, the United Arab Emirates, and Saudi Arabia.

3. British FM ‘Worried’ Israel May Have Breached International Law In Gaza – Al Jazeera

Speaking to the British parliament’s Foreign Affairs Committee, British Foreign Minister David Cameron said some of what he had seen during the war in the besieged Palestinian territory was “deeply concerning.”

RCM/TIPP Economic Optimism Index Brightens In January

Asked during a question-and-answer session with lawmakers if Israel could be “vulnerable to a challenge” from the International Criminal Court (ICC) in the Hague over whether its actions were proportionate, Cameron said the stance was “close to that.”

4. U.S., UK Forces Shoot Down Houthi Missiles, Drones In Red Sea: U.S. Military – Reuters

U.S. and UK forces shot down 21 drones and missiles fired by Yemen-based Houthis on Tuesday into the Southern Red Sea towards international shipping lanes, the U.S. military’s Central Command said.

RCM/TIPP Economic Optimism Index Brightens In January

U.S. Central Command said 18 drones, two anti-ship cruise missiles, and one anti-ship ballistic missile were shot down by U.S. and British forces.

5. Saudi Arabia Interested In Israel Normalization Deal After War – BBC

Saudi Arabia’s ambassador to the UK says it is interested in normalizing relations with Israel after the war in Gaza but that any deal must lead to the creation of a Palestinian state.

RCM/TIPP Economic Optimism Index Brightens In January

Saudi Arabia still believed in establishing ties with Israel despite the “deplorable” casualty figures in Gaza, he said. Still, it would not “come at the cost of the Palestinian people,” Prince Khalid bin Bandar said.

6. Zelenskiy Stresses Unity In Call With Polish President – RFE/RL

In a phone call, Ukrainian President Volodymyr Zelenskiy discussed further defense cooperation and Ukraine’s air-defense needs with Polish President Andrzej Duda.

RCM/TIPP Economic Optimism Index Brightens In January

Poland and Ukraine have been working to defuse a dispute involving farmers, who began blocking border crossings with Ukraine in November. Zelenskiy also spoke with Belgian Prime Minister Alexander De Croo and congratulated Belgium on assuming the presidency of the EU Council.

7. Kyiv Mayor Under Scrutiny For Buying $6 Million Mansion In Germany: Reports – WION

Kyiv Mayor Vitali Klitschko has come under heavy scrutiny after it was revealed that he bought a mansion in Hamburg, Germany, worth almost $6 million, according to a report citing his official tax return.

RCM/TIPP Economic Optimism Index Brightens In January

Ukraine President Volodymyr Zelensky signed a bill in September last year mandating electronic declarations for officials, which were suspended after Russia’s military operation began in 2022.

8. Putin Resurrects Joseph Stalin’s ‘Secret Weapon’ The Feared SMERSH Spy-Catchers – The Sun

According to British intelligence, Vladimir Putin has resurrected the feared counterintelligence group Smersh.

RCM/TIPP Economic Optimism Index Brightens In January

Smersh, its name derived from an acronym for “death to spies,” was formed by Soviet dictator Joseph Stalin in 1941 to catch spies and round up dissidents against the communist regime. It was disbanded in 1946, but the Ministry of Defence has said the organization has been “re-established.”

9. Putin Grants Citizenship To 44 Foreign Nationals – RFE/RL

Russian President Vladimir Putin signed a decree granting citizenship to 44 foreign nationals, including Ratko Samac, a former officer of the Yugoslav army who is wanted in Bosnia-Herzegovina for war crimes he allegedly committed in 1993. 

RCM/TIPP Economic Optimism Index Brightens In January

Samac has resided in Russia since 1999. Russia has refused to extradite him to Sarajevo. The list of other new Russian citizens includes Kremlin-friendly U.S. professional boxer Kevin Johnson, Canadian hockey player Brendan Leipsic, and Croatian physician Mirela Jakupanec.

10. US Man Held In Moscow On Drug Charges – VOA

Russia has detained and brought drug-related charges against U.S. citizen Robert Woodland, who was apprehended by law enforcement earlier this month, a Moscow court said Tuesday.

RCM/TIPP Economic Optimism Index Brightens In January

He is accused of the “illegal acquisition, storage, transportation, manufacture, processing” of drugs and faces up to 20 years in prison.

11. JPMorgan Predicts China’s Yuan Dethroning The US’s Dollar – Cryptopolitan

The global financial landscape is on the brink of a monumental shift, with JPMorgan spotlighting the Chinese Yuan’s potential to unseat the US Dollar from its long-held throne.

RCM/TIPP Economic Optimism Index Brightens In January

This prediction isn’t just a casual remark in the world of currencies; it’s akin to forecasting a tectonic shift in the very bedrock of international trade and economics.

12. China Can Hijack Foreign Radar To Detect Enemies, Research Says – Newsweek

Chinese scientists claim to have developed a technology to capture and read the complex radar signatures of foreign militaries using only basic tools.

RCM/TIPP Economic Optimism Index Brightens In January

Scientists from the People’s Liberation Army Naval Aviation University and Yantai University, located in China’s eastern Shandong province, said their algorithm effectively turns an adversary’s weapon against them, Hong Kong’s South China Morning Post newspaper reported on Sunday.

13. What China’s Ban On Rare Earths Processing Technology Exports Means – CSIS

China announced a ban on rare earth extraction and separation technologies on December 21, 2023. This has significant implications for U.S. national, economic, and rare earth security.

RCM/TIPP Economic Optimism Index Brightens In January

Rare earth elements—a group of 17 metals—are used in defense technologies, including missiles, lasers, vehicle-mounted systems such as tanks, and military communications. They are also used in computers, televisions, and smartphones, along with various clean energy technologies central to decarbonization.

14. China Tells U.S. It Will ‘Never Compromise’ On Taiwan – BBC

China has said it will “never compromise” on the issue of Taiwan in its first military talks with the U.S. since 2021. It urged the U.S. to “stop arming Taiwan” and take its concerns “seriously.”

RCM/TIPP Economic Optimism Index Brightens In January

This comes just days ahead of pivotal elections in Taiwan, which could push the island further towards – or away – from Beijing. The two-day talks concluded in Washington on Tuesday.

15. China’s Foreign Minister Contender Seeks Peace, Including Taiwan – Nikkei Asia

China is not looking to “fight a cold war or a hot war with anyone” but instead hopes to see dialogue with Taiwan, veteran diplomat Liu Jianchao told the Council on Foreign Relations in New York.

RCM/TIPP Economic Optimism Index Brightens In January

Seen as a strong contender to be China’s next foreign minister, Liu, currently the head of the international liaison department of the Chinese Communist Party, tried to portray a softer image of Beijing on his U.S. tour, which also includes a stop in Washington.

16. Chinese Satellite Launch Triggers Alarm In Self-Ruled Taiwan – Al Jazeera

Taiwanese authorities sent out an emergency message following the launch of a Chinese satellite over the self-ruled island’s airspace. The mobile phone alert was sent as Chinese state media confirmed the launch of a science satellite.

RCM/TIPP Economic Optimism Index Brightens In January

An English-language version announced it as an “air raid alert” and warned of a “missile flyover Taiwan airspace.” However, the defense ministry later apologized for the mistake, saying the default message in English had not been updated.

17. Chinese ‘Monster’ Ship Patrols Near Vietnam’s Oil Fields – RFA

Chinese coast guard ship 5901, dubbed “The Monster” for its size, has been near Vietnam’s oil exploration blocks at Vanguard Bank in the South China Sea since early December, Radio Free Asia has learned.

RCM/TIPP Economic Optimism Index Brightens In January

Vanguard Bank, called Bai Tu Chinh in Vietnamese, is an important site of Vietnamese oil and gas development where Vietnam and some foreign partners carry out oil and gas exploration.

18. US Navy Petty Officer Sentenced To Two Years In Prison Over Spying For China – Guardian

A US Navy petty officer who pleaded guilty to providing sensitive military information to a Chinese intelligence officer was sentenced to more than two years in prison, the DOJ said.

RCM/TIPP Economic Optimism Index Brightens In January

Wenheng Zhao, 26, and another US sailor, Jinchao Wei, were arrested in August on suspicion of spying for China. Zhao pleaded guilty in a federal court in California in October to charges of conspiring with a foreign intelligence officer and accepting a bribe. He was sentenced on Monday to 27 months in prison and a $5,500 fine.

19. Who Is Gabriel Attal, France’s New Prime Minister? – Politico

France’s new head of government, a child of Paris’ elite circles, arrives with significant political experience despite his youth.

RCM/TIPP Economic Optimism Index Brightens In January

20. Eurosceptics Tone Down Talk Of EU Exit Ahead Of Projected Election Breakthrough – Brussels Signal

Parties that oppose more EU integration have differing opinions over Ukraine but share views on migration and climate-change policy. Their aim is not to destroy the European Union but to reform it.

RCM/TIPP Economic Optimism Index Brightens In January

 21. North Korean Leader Says He Has ‘No Intention Of Avoiding War’ With S. Korea – Yonhap

North Korean leader Kim Jong-un called South Korea the country’s “principal enemy” and said he has “no intention of avoiding war,” state media said.

RCM/TIPP Economic Optimism Index Brightens In January

Kim also threatened to annihilate the South if it attempts to use force against the North, as he inspected a munitions factory, the North’s official Korean Central News Agency (KCNA) said.

22. U.S. Base Transfer Work In Okinawa Begins After State Oks By Proxy – Kyodo News

The Japanese government started construction work for the transfer of a key U.S. military base within Okinawa Prefecture after overriding the local government’s objection and approving a modified landfill plan by proxy in an unprecedented move.

RCM/TIPP Economic Optimism Index Brightens In January
Photo taken from a drone shows heavy machinery transferring stone materials from a barge into the sea off the Henoko coastal area in Nago, Okinawa Prefecture, on Jan. 10, 2024, as construction work to reinforce soft ground at the relocation site for U.S. Marine Corps Air Station Futenma commenced. (Kyodo)

Okinawa, which hosts the bulk of U.S. military facilities in Japan, has long opposed the base transfer within the southern Japan island prefecture, seeking instead to move the base out of the prefecture altogether.

23. Ecuador: Gunmen Storm Television Studio Live On Air – BBC

Masked gunmen broke into a live television studio in Ecuador and threatened terrified staff. A 60-day state of emergency began in Ecuador on Monday.

RCM/TIPP Economic Optimism Index Brightens In January

The emergency was declared after a notorious gangster vanished from his prison cell. It is unclear whether the incident at the TV studio in Guayaquil was related to the disappearance from a prison in the same city of the boss of the Choneros gang, Adolfo Macías Villamar, or Fito, as he is better known.

24. Microplastics Found In Nearly 90% Of Meat, Plant-Based Alternatives: ‘There’s No Escaping Them’ – New York Post

New research finds that nearly 90% of proteins — yes, even vegan alternatives — tested by researchers contain microplastics, which have been linked to negative health consequences.

RCM/TIPP Economic Optimism Index Brightens In January

Sixteen types of protein sources — including chicken, beef, seafood, pork, tofu, and three plant-based alternatives — were analyzed for microplastics in a study published Monday in the journal Environmental Pollution.

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Republished with permission from TIPP Insights

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