The RealClearMarkets/TIPP Economic Optimism Index, a leading gauge of consumer sentiment, dropped sharply (3.1%) in June to 40.5. Since September 2021, the Index has remained in negative territory for 34 consecutive months. June’s reading of 40.5 is 17.6% lower than the historic average of 49.2.
Optimism among investors edged up 0.4% from 46.3 in May to 46.5 in June, while it slumped by 6.0% among non-investors, from 40.1 in May to 37.7 in June.
The RCM/TIPP Economic Optimism Index is the first monthly measure of consumer confidence. It has established a strong track record of foreshadowing the confidence indicators issued later each month by the University of Michigan and The Conference Board. (From February 2001 to October 2023, TIPP released this Index monthly in collaboration with its former sponsor and media partner, Investor’s Business Daily.)
RCM/TIPP surveyed 1,910 adults from May 29 to May 31 for the June Index. The online survey utilized TIPP’s network of panels to obtain the sample. A more detailed methodology is available here.
RCM/TIPP Economic Optimism Index
The RCM/TIPP Economic Optimism Index has three key components. In June, two of these components declined, while one showed improvement. The Index and its components range from 0 to 100. A reading above 50.0 signals optimism, and a reading below 50.0 indicates pessimism. 50 is neutral.
- The Six-Month Economic Outlook, which measures how consumers perceive the economy’s prospects in the next six months, improved from 35.7 in May to 36.8 in June, marking a 3.1% gain. In October 2023, this component 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 own finances in the next six months, declined by 6.6% from its previous reading of 51.3 in May to 47.9 this month. In January, the component had crossed above the neutral reading of 50.0. It remained above 50.0 in the positive territory for five consecutive months, only to drop below 50.0 in June.
- Confidence in Federal Economic Policies, a proprietary RCM/TIPP measure of views on the effectiveness of government economic policies, declined sharply from 38.5 in May to 36.7 this month, reflecting a 4.7% drop.
Party Dynamics
Democrats showed the highest confidence in June, at 57.9, increasing slightly from 57.5 in May, a 0.7% gain.
Meanwhile, Republicans’ confidence declined 2.1 points to 28.4 this month, a drop of 6.9%. Since the last presidential election, it has stayed in the pessimistic zone for 43 consecutive months.
Independents’ confidence has been in pessimistic territory for 51 months since April 2020, the month after the onset of the pandemic. In June, independents dropped 2.6 points, or 7.2%, and posted 33.7 on the Index.
Investor Confidence
Respondents are considered “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. 31% of respondents met this criterion, and 63% were classified as non-investors. We could not ascertain the status of 6% of respondents.
Optimism among investors gained 0.2 points or 0.4%, from 46.3 in May to 46.5 in June, while it declined by 2.4 points or 6.0% among non-investors, from 40.1 in May to 37.7 in June.
The economic optimism gap between investors and non-investors widened to 8.8 in June from 6.2 in May and 18.3 in April.
According to the RealClearMarkets/TIPP Economic Optimism Index, economic optimism levels for 20 out of 21 demographic groups declined in June 2024 compared to the historic average of the past 281 months.
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. If the 6-month average exceeds the 12-month average, the same holds true.
In June, the Economic Optimism Index and its three components are lower than their respective three-month moving averages.
Further, the three-month moving averages are below their six-month moving averages. The data points to a slowdown.
Demographic Analysis
The number of groups in the positive zone indicates the breadth of optimism in American society. This month, two of the 21 demographic groups we track, Democrats (57.9) and Blacks/Hispanics (50.4), 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 been in the range of one to six. In June, only two groups are in the positive zone.
Five of the 21 groups improved on the Index, compared to five in May, six in April, and 10 in March.
Inflation
The survey showed that 84% are worried about inflation. One-half (52%) are very concerned, and another 32% are somewhat concerned.
Americans continue to suffer because real wages have not increased, despite the CPI rate falling from a 40-year high of 9.1% in June 2022 to 3.5% in March 2024.
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 detail after the CPI data is released next week.
Recession
Four in ten (44%) believe we are in a recession, while 26% are unsure. 30% think we are not in a recession.
Further, nearly two-thirds (62%) think the U.S. economy is not improving, while 25% believe it is improving.
Fiscal Profligacy
Government spending has spiraled out of control, resulting in a national debt exceeding $34 trillion, which increases by $1 trillion every 100 days.
Most Americans are concerned about the sustainability of government spending. 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.
Compare our report to the media’s narrative, which highlights the disconnect between the media elite and the real plight of Americans. The media blames ‘social media’ and ‘misinformation’ for people feeling bad about the economy.
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TIPP Takes
Geopolitics, Geoeconomics, And More
1. Israel Launches New Military Operation In Central Gaza – BBC
The Israeli military says it has taken “operational control” over eastern areas of Bureij refugee camp and the town of Deir al-Balah in central Gaza, as dozens of Palestinians were reported killed.
The military said troops backed by air strikes had begun an operation against “terrorists and terrorist infrastructure above and below ground.”
Residents reported intense bombardment, and the charity Médecins Sans Frontières said at least 70 dead people – the majority women and children – had been brought to a local hospital since Tuesday.
2. Biden’s Airing Of Gaza Ceasefire Proposal Presses Netanyahu Toward A Deal – Reuters
President Biden’s public announcement of the Gaza ceasefire proposal – developed by Israel and the U.S. and sent to Hamas – was made without seeking agreement from Israeli PM Benjamin Netanyahu.
The decision to announce unilaterally – an unusual step for the United States to take with a close ally – was deliberate, officials say and narrowed the room for Israel or Hamas to back away from the deal.
3. Russia’s Putin Threatens To Deliver Arms To Countries At Odds With West – AFP
Russian President Vladimir Putin criticized the West’s delivery of long-range weapons to Ukraine, arguing Moscow could arm other countries with similar weapons to attack Western targets.
Putin said at a rare press conference with foreign news outlets:
If someone thinks it is possible to supply such weapons to a warzone to attack our territory and create problems for us, why don’t we have the right to supply weapons of the same class to regions of the world where there will be strikes on sensitive facilities of those (Western) countries.
4. Russia To Deploy Combat Vessels To Caribbean For Naval Exercises: U.S. Official – Reuters
A senior U.S. official said the naval exercises will likely include port calls in Cuba and possibly stops in Venezuela.
The official told a small group of reporters that the United States does not see the move involving a relatively small number of vessels and planes as threatening, but the U.S. Navy will monitor the exercises.
“This is about Russia showing that it’s still capable of some level of global power projection,” the official said.
5. Ukraine Bars Men With Dual Citizenship Or Foreign Residence From Leaving Country – RFE/RL
Ukraine does not recognize dual nationality and regards citizens with dual citizenship as Ukrainian nationals. “Before, we allowed dual citizens or Ukrainians with permanent residence abroad to leave the country, but not anymore,” Andriy Demchenko of Ukraine’s State Border Service said.
Under the current martial law, Ukrainian men between the ages of 18 and 60 are not allowed to leave the country.
6. China Denies Fuelling Russia-Ukraine War Tensions, Says It Supports Peace – Al Jazeera
The Chinese comments come after Ukrainian President Volodymyr Zelenskyy accused Russia and China of attempting to undermine the Swiss peace summit.
China has never “fanned fire or fuelled the flames,” Ministry of Foreign Affairs spokesperson Mao Ning said after she was asked about the peace summit scheduled for June 15-16.
Speaking in Singapore, Zelenskyy said China and Russia were pressuring other countries and their leaders not to attend the upcoming talks. He did not say which ones.
7. Biden Says Not Ruling Out Use Of U.S. Forces To Defend Taiwan – Kyodo News
President Joe Biden issued a renewed warning to China over Taiwan in an interview with Time magazine, saying the U.S. military could be used to defend the self-ruled democratic island in the event of a Chinese invasion.
Biden said he has made clear to Chinese President Xi Jinping the long-standing policy under which Washington refrains from seeking independence for Taiwan but will stand behind it if Beijing unilaterally tries to change the status quo, adding, “We’ve been in consultation with our allies in the region.”
8. Chinese Nationals Ran Cybercrime Syndicate From Zambia – BBC
Twenty-two Chinese nationals have pleaded guilty to committing cyber-related crimes in Zambia.
They are among 77 suspects arrested in April concerning what authorities described as a “sophisticated internet fraud syndicate.” The swoop on a Chinese-run company in the capital, Lusaka, followed an alarming rise in internet fraud cases in the country, targeting people in countries around the world.
9. China Sends Glacial Water From Tibet To The Maldives, Raising Concerns – RFA
China gifted 3,000 metric tons of Tibet’s glacial water to the island nation of the Maldives in two separate batches in March and May — the same months it unveiled and implemented water conservation regulations at home.
Maldives is experiencing a scarcity of freshwater.
Tibetans inside Tibet said they face water shortages themselves because Chinese authorities have implemented systematic water conservation and management campaigns across various Tibetan villages and towns for over a decade.
10. Five Eyes Nations Say China Is Poaching Western Ex-Military – RFA
The American-led Five Eyes intelligence sharing network said China’s navy and air force have been “aggressively recruiting Western military talent” to train their aviators in complex aerial maneuvers taught by U.S. armed forces.
Recruitment is “not always obvious, as companies may not initially promote the PLA’s role,” the bulletin says. The Five Eyes network includes the United States, Australia, the United Kingdom, Canada and New Zealand.
11. Iran Commander Says Israel Will ‘Pay’ For Killing Of IRGC Advisor In Syria – Al Arabiya
An IRGC officer, Saeed Abyar, was killed in an Israeli strike on Syria’s northern city of Aleppo early Monday, according to Iranian media.
“Zionist child-killing criminals should know that they will pay for the pure blood shed in this crime – they should await a response,” the IRGC’s commander-in-chief, Hossein Salami, said in a statement carried by the state-affiliated Tasnim news agency.
Salami said that Abyar was in Syria on an “advisory mission.”
12. UN Nuclear Watchdog Board Passes Resolution Criticizing Iran – Al Arabiya
Three diplomats told AFP that the International Atomic Energy Agency’s 35-nation board of governors has passed a resolution criticizing Iran’s lack of cooperation with the UN nuclear watchdog.
The motion brought by Britain, France, and Germany – but opposed by China and Russia – is the first of its kind since November 2022.
“A continued failure” by Iran to provide full cooperation on the years-long probe “may necessitate” a comprehensive assessment by IAEA chief Rafael Grossi, the text said.
13. Japan Enacts Child Care Law To Tackle Declining Birthrate – Kyodo News
Japan’s parliament enacted a law to expand monthly child allowances and parental leave as the government seeks to tackle the country’s declining birthrate through more equitable burden sharing.
The law comes as Prime Minister Fumio Kishida’s government views the period leading up to 2030 as “the last chance” to reverse the trend, with late marriages and financial worries often cited as reasons for the declining birthrate.
The number of babies born in 2023 fell to a record low in the country’s rapidly graying society.
14. Ban Fossil Fuel Ads To Save Climate, Says UN Chief – BBC
The head of the United Nations said the world’s fossil fuel industries should be banned from advertising to help save the world from climate change.
UN Secretary-General António Guterres called coal, oil, and gas corporations the “godfathers of climate chaos” who had distorted the truth and deceived the public for decades.
Just as tobacco advertising was banned because of the threat to health, the same should now apply to fossil fuels, he said.
15. AI ‘Healthcare Revolution’ Already Under Way, Nvidia Says – Al Jazeera
Kimberly Powell, vice president of healthcare at Nvidia, said while it is still “early days,” healthcare will probably be more affected by AI than any other area of life.
“Healthcare is probably the most impactful utility of generative AI that there will be,” Powell said during Nvidia’s AI Summit in Taipei.
Powell said AI is already making its mark in developing and testing new drugs, which can take up to 15 years and cost up to $2bn under current timeframes.
16. Diets High In Salt May Raise Risk For Eczema – HealthDay News
Doctors already warn folks off salt due to its heart risks, but new research suggests sodium isn’t helping your skin either.
The data—from an ongoing British research database called the UK Biobank—found that people whose urine samples suggested high salt intake faced an 11% higher odds of severe eczema.
“Most Americans eat too much salt and can safely reduce their intake to recommended levels,” study lead Dr. Katrina Abuabara, associate professor of dermatology at the University of California, San Francisco, said.
Republished with permission from TIPP Insights
