The RealClearMarkets/TIPP Economic Optimism Index, a leading gauge of consumer sentiment, dropped 1.1% in March to 43.5. The index has remained in negative territory for 31 consecutive months since September 2021.
RealClearMarkets (RCM) is the new sponsor of the TIPP Economic Optimism Index, which has been continuously measuring consumer outlook since February 2001.
The RCM/TIPP Economic Optimism Index is the first monthly measure of consumer confidence. It accurately captures monthly changes, as reflected in other well-known surveys by The Conference Board and the University of Michigan.
RCM/TIPP Economic Optimism Index
The RCM/TIPP Economic Optimism Index has three key components. For the index and its components, a reading above 50.0 signals optimism, and a reading below 50.0 indicates pessimism.
In March, two of these components declined, while one showed improvement.
- The Six-Month Economic Outlook, which measures how consumers perceive the economy’s prospects in the next six months, dropped from 39.6 in February to 38.9 in March, marking a 1.8% decrease. In October 2023, this component posted 28.7, its lowest reading since the index debuted 23 years ago.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, improved 0.7% from its previous reading of 53.4 in February to 53.8 this month. In January, the component crossed above the neutral reading of 50.0 and has since remained in positive territory for the third month.
- Confidence in Federal Economic Policies, a proprietary RCM/TIPP measure of views on the effectiveness of government economic policies, declined from 39.0 in February to 37.9, reflecting a 2.8% drop.
Party Dynamics
Democrats posted the highest confidence levels in March, at 57.6, edging up from 57.5 in February.
Meanwhile, Republicans’ confidence declined 1.6 points to 31.0 this month. It has stayed in the pessimistic zone for 40 consecutive months since December 2020, after the last presidential election.
Independents’ confidence has been in pessimistic territory for 48 months since April 2020, the month after the onset of the pandemic. They dropped slightly by 0.2 points and posted 40.9 on the index in March.
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 30% of respondents who met this criterion as investors and 65% as non-investors. We could not ascertain the status of 5% of respondents.
Reflecting the recent stock market gains, optimism among investors gained 2.8% from 49.3 in February to 50.7 in March, while it dropped by 2.9% among non-investors, from 41.3 in February to 40.1 in March.
The economic optimism gap between investors and non-investors is 10.6 in March, widening from 8.0 in February.
Momentum
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 March, all three components and the Economic Optimism Index are lower than their three-month moving averages. However, the three-month moving averages for all the components and the Optimism Index are higher than the six-month moving average. As a result, the data shows a mixed picture.
Demographic Analysis
The number of groups in the positive zone indicates the breadth of optimism in American society. This month, three of the 21 demographic groups we track—such as age, income, education, race, etc. —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 declining to one group in August. Since August, it has moved in the range of one to six. In March, only three groups are in the positive zone.
Ten of the 21 groups improved on the index, compared to 10 in February and 19 in January.
Why do we look at this? It shows the breadth of optimism.
Inflation
Inflation acts as a form of indirect tax on American households. According to a recent TIPP survey, 84% are worried about inflation. One-half (51%) are very concerned, and another 33% 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 January 2024, 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 on March 12.
Recession
Four in ten (43%) Americans believe we are in a recession, while 24% are unsure. 32% believe we are not in a recession. Interestingly, the share of Americans who feel we are in a recession has stayed at 43% since January.
Further, over one-half (61%) think the U.S. economy is not improving, while 27% believe it is improving.
Fiscal Profligacy
Government spending has spiraled out of control, resulting in a national debt exceeding $34 trillion. The debt is increasing by $1 trillion every 100 days.
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.
We anticipate a stagflationary economy in 2024. The risks on the downside outweigh those on the upside. Watch the real estate, stock, and job markets, and see if Washington can pass spending bills.
Using an online survey, TIPP polled 1,419 adults nationwide from February 28 to March 1. Our next report will be released on Tuesday, April 9. A more detailed methodology is available here.
TIPP Takes
Geopolitics, Geoeconomics, And More
1. Pentagon Chief Tells Israel’s Gantz There Needs To Be Credible Plan Before Rafah Ops – Al Arabiya
Defense Secretary Lloyd Austin met with Israeli War Cabinet Member Benny Gantz, emphasizing the need for a “credible and implementable plan for protecting civilians and addressing the humanitarian situation” before any ground operations in Rafah.
Gantz was in Washington as part of his tour to meet senior American officials despite opposition from Benjamin Netanyahu. On Monday, he met with the vice president, national security advisor, and secretary of state.
2. Israel Blocks UN Food Convoy For North Gaza – Al Jazeera
The World Food Programme said it dispatched a 14-truck food convoy to northern Gaza on Tuesday, but the Israeli army turned it back after a three-hour wait at the Wadi Gaza checkpoint.
WFP said, “To avert famine,” there must be road access to Gaza’s north. Last month, the WFP said it was pausing deliveries of life-saving food aid to northern Gaza until conditions are in place that allow for safe distributions.
3. “Got To Finish The Problem”: Donald Trump Supports Israel’s War In Gaza – AFP
Republican presidential frontrunner Donald Trump expressed his support for Israel’s war in Gaza in his most explicit comments yet on the fighting, as international pressure grows on the United States to rein in its ally.
“Yes,” Trump responded when asked during an interview on Fox News if he was “in Israel’s camp.” When asked if the former president was “on board” with the way Israel was executing its offensive in Gaza. “You’ve got to finish the problem,” Trump responded.
4. EU Unveils €1.5 Billion Defense Programme As Ukraine War Persists – RFI
The European Commission has announced an unprecedented defense package for the EU to boost its arms industry, allowing the bloc to shift to “war economy mode” in response to Russia’s invasion of Ukraine.
European Commissioner for the Internal Market, Thierry Breton, unveiled the European Defence Industrial Strategy in Brussels – an extensive project encouraging EU countries to buy more weapons from European companies and helping European firms increase production capacity.
5. Macron Urges Ukraine’s Allies Not To Be “Cowards” To Fight Against Russia – AFP
Emmanuel Macron said that he “fully stood behind” controversial remarks made last week not ruling out the deployment of Western troops to Ukraine, which sent a shockwave around Europe.
“We are surely approaching a moment for Europe in which it will be necessary not to be cowards,” Macron said on a visit to the Czech Republic, which is pushing a plan to buy weapons outside Europe for Ukraine.
6. Russian Intelligence Chief Says Navalny Died Of Natural Causes – A.P.
Russian Foreign Intelligence Service (SVR) chief Sergei Naryshkin’s statement appeared to be an attempt to deflect international outrage over the death of President Vladimir Putin’s fiercest foe.
Naryshkin made the statement in an interview broadcast by Russian state television. He didn’t name the cause of death. Many Western leaders said Putin was ultimately responsible for Navalny’s death on February 16 at a remote Arctic prison. The Kremlin rejects the accusation.
7. Russia Floats Idea Of Building Nuclear Plant On Moon – D.W.
Moscow plans to contribute its “nuclear space energy” expertise to a joint lunar program with China, including a nuclear power plant on the moon, Russia’s space agency – Roskosmos – chief Yuri Borisov said.
Some in the U.S. have speculated that Russia is planning to use a new type of nuclear weapon against satellites.
8. Germany Blames Military Recording Leak On One Participant’s Error Leading To Russian Intercept – WION
German Defense Minister Boris Pistorius said that one high-level military officer used an unsecured phone line during a call about the Ukraine war, which Russia intercepted and leaked to the public.
He also dismissed concerns about German communications systems being compromised.
“Our communication systems have not been compromised,” Pistorius told reporters. He added, “The reason the air force call could nonetheless be recorded was because of an individual’s operational mistake.”
9. China Congress Report Mentions ‘Security’ Record 29 Times – Nikkei Asia
China’s leadership emphasized national security based on political stability and economic growth. It hinted at a rush to tamp down social unrest, using the term “security” a record 29 times in the annual government work report.
The premier traditionally read the report at China’s annual legislative gathering, summarizing the results of major policies in the past year and plans for the coming year. Chinese Premier Li Qiang delivered this year’s document before the National People’s Congress.
10. China Real Estate Crisis: Banks To Lend $18bn For ‘White List’ Projects – Nikkei Asia
China’s biggest commercial banks are prepared to extend over 130 billion yuan ($18 billion) of financing for real estate projects, new disclosures show, in response to the government’s latest call to support the ailing property sector.
Agricultural Bank of China approved more than 40 billion yuan in financing, citing its “responsibility as a state-owned bank” in a last-minute statement. China Construction Bank is financing nearly 100 real estate projects on a newly created government white list.
11. China-Maldives Defense Deal Signed Amid India Rift – D.W.
The Maldives signs a ‘military assistance’ deal with China, marking a significant shift away from India.
Relations with New Delhi became tense when Male ordered Indian troops to leave the archipelago. India and Maldives had historically enjoyed good relations, which turned sour after pro-China President Mohamed Muizzu came to power on an “India Out” platform in last year’s elections.
Related tippinsights editorial: Chinese ‘Research Vessel’ Raises Indian Ocean Tensions
12. Philippines: 4 Boat Crew Hurt As China Coast Guard Fires Water Cannon – RFA
Four Filipino crew members were injured when China Coast Guard ships used water cannons to block Philippine vessels taking supplies to Manila’s military outpost at Ayungin (Second Thomas) Shoal in the South China Sea, Filipino officials said.
Chinese and Philippine ships have engaged in a cat-and-mouse chase in waters around the shoal for more than a year, with Manila accusing Beijing of “aggressively” trying to stop its vessels from delivering supplies to Filipino troops stationed at Ayungin.
13. Iran Executed Record 834 People Last Year, According To Rights Groups – RFI
The number of executions that Iran has carried out by hanging in recent years was up some 43 percent in 2022.
Norway-based Iran Human Rights (IHR) and Paris-based Together Against the Death Penalty (ECPM), in a joint report, accused Iran of using the death penalty to spread fear throughout society in the wake of the protests sparked by the September 2022 death in police custody of Mahsa Amini that shook the authorities.
14. Underwater Internet Cables In Red Sea Likely Damaged After Houthis Downed Ship – Al Arabiya
A U.S. official tells Al Arabiya English that underwater internet cables in the Red Sea were likely damaged as a result of a ship that sank after Yemen’s Houthis attacked it.
A UK-owned bulk carrier, the Rubymar, sank after being attacked by the Houthis last month in the Red Sea. The ship was carrying hazardous fertilizer.
15. France Scales Back Paris Summer Olympics Opening Ceremonies Amid Security Concerns – UPI
France is scaling back plans to host 600,000 spectators for the Paris 2024 Summer Olympic Games opening ceremonies, the French government announced, amid growing concerns over security and crowd control along the River Seine.
Slashing the crowd size came at the request of French President Emmanuel Macron, according to a top official with French intelligence services who said there are concerns about security and “the main threat is Islamist terrorism.”
16. Apple: iPhone China Sales Slide As Huawei Soars, Report Says – BBC
According to research firm Counterpoint, sales of Apple’s iPhone in China fell by 24% in the first six weeks of 2024 compared to a year earlier.
It comes as the U.S. technology giant faces fierce competition from local rivals in the country. During the same period, the report says China’s Huawei saw its sales jump by 64% in its home market.
The report said that China, one of Apple’s biggest markets, also saw overall smartphone sales shrink by 7% in the same period.
17. Haiti Gang Leader Warns Of Civil War Unless PM Ariel Henry Steps Down – Al Jazeera
Jimmy Cherizier, the Haitian gang leader behind a violent attempt to overthrow Prime Minister Ariel Henry, has warned of civil war and “genocide” unless Henry steps down.
Armed criminal gangs, who control large swathes of the country, launched a coordinated assault to remove the prime minister when he was out of the country last week.
18. El Nino Weakens But Will Sustain Elevated Temperatures: UN Weather Agency – WION
The El Nino weather pattern has commenced its weakening phase but is anticipated to continue influencing above-average temperatures worldwide, according to the World Meteorological Organization (WMO).
It is expected to impact global climate in the upcoming months, leading to above-normal temperatures from March to May in most land areas. Lasting approximately nine to 12 months, El Nino often triggers extreme weather events such as wildfires, tropical cyclones, and prolonged droughts.
19. MH370 Mystery: U.S.-Based Company Claims It Knows The Flight’s Final Resting Place – WION
A Texas-based company, Ocean Infinity, announced a proposal for a new search in the southern Indian Ocean, where the plane is believed to have crashed.
The company has already submitted the proposal to the Malaysian government, proposing a “no-cure, no-fee” approach for further search.
Flight MH370 mysteriously disappeared from radar screens on March 8, 2014, while flying over the South China Sea, becoming one of Malaysia’s deadliest aviation incidents. A few bits of debris washed up on an island in the Indian Ocean, but the authorities did not find any trace of the wreck.
20. Lack Of Adequate Sleep May Raise Risk For Diabetes – UPI Health
Besides leaving you groggy all day, your insomnia could also be raising your odds for Type 2 diabetes, new research shows.
Swedish researchers found that compared to people who slept the recommended seven/eight hours per night, folks who habitually slept five hours per night had 16% higher odds for the blood sugar illness. Those who got only three to four hours of shut-eye faced a 41% higher risk.
Republished with permission from TIPP Insights
