The RealClearMarkets/TIPP Economic Optimism Index, a leading gauge of consumer sentiment, rose by 1.5% in December to 54.0, reaching its highest level in 40 months since August 2021 (53.6). The Index had been in negative territory for 38 consecutive months, starting in September 2021, and broke out decisively in November after President Donald Trump’s historic return as the 47th President.
December’s reading of 54.0 is 8.3% higher than its historical average of 49.1.
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 1,411 adults on November 27 and 29 for the December index. The online survey utilized TIPP’s network of panels to obtain the sample. A more detailed methodology is available here.
The Index and its components range from 0 to 100. A reading above 50.0 signals optimism, and below 50.0 indicates pessimism. 50 is neutral.
RCM/TIPP Economic Optimism Index
The RCM/TIPP Economic Optimism Index has three key components. In December, one of the three components advanced, and two declined.
- The Six-Month Economic Outlook, which measures how consumers perceive the economy’s prospects in the next six months, declined slightly by 0.5%, from 55.9 in November to 55.6 in December. Last month, the component broke into positive territory for the first time in 39 months, with an 18.2% gain after remaining below 50.0 in pessimistic territory from September 2021 to October 2024. In October 2023, it posted a reading of 28.7, its lowest 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 3.8% from its previous reading of 61.0 in November to 58.7 this month. Last month’s reading was the highest since March 2020 (61.2), when the pandemic hit the U.S., signaling the expectations of a strong economy under the new president.
- Confidence in Federal Economic Policies, a proprietary RCM/TIPP measure of Americans’ views on the effectiveness of government economic policies, increased from 42.7 in November to 47.7 this month, reflecting an 11.7% gain. This component has been below 50.0 (pessimistic territory) for 40 consecutive months since September 2021.
Party Dynamics
With Donald Trump’s election as the 47th President, Democrats’ confidence tumbled from 62.9 in October to 43.2 in November. However, it increased by 4.4 points or 10.2% in December to 47.6.
Meanwhile, December again saw an increase in Republicans’ confidence by 1.7 points to 66.4.
In November, independent voters’ confidence rose by 8.6 points, or 20%, to 51.3 after remaining in pessimistic territory for 56 months, beginning in April 2020, shortly after the onset of the pandemic. The Index posted its first positive reading in nearly five years. It gave up 7.2 points or 14.2% in December, retreating to 44.1.
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. One-third (33%) of respondents met this criterion, and 63% were classified as non-investors. We could not ascertain the status of six percent of respondents.
Investor optimism rose by 5.7%, climbing from 57.8 in November to 61.1 in December, while non-investors decreased slightly by 0.4%, from 50.5 to 50.3. The economic optimism gap between investors and non-investors widened to 10.8 points in December, up from 7.3 in November, 13.6 in October, and 10.4 in September.
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; similarly, if the 6-month average exceeds the 12-month average, the same holds.
In December, the Economic Optimism Index and its three components are higher or the same as their respective three-month moving averages, indicating a positive trend. Notice the stair-step pattern confirming the trend.
Demographic Analysis
The number of groups in the positive zone indicates the breadth of optimism in American society. This month, demographic groups in the optimism zone fell from 18 in October to 15. In the immediate aftermath of the election, it had jumped from eight in October to 18 in November, indicating widespread optimism.
Ten groups improved on the Index, compared to 18 in November, 14 in October, and 17 in September.
Economic optimism levels for 16 of 21 demographic groups are higher in December 2024 than the historical average of the past 287 months.
RCM/TIPP Financial-Related Stress Index
RCM/TIPP also releases our companion index, known as the RCM/TIPP Financial-Related Stress Index, the only metric to track the financial stress felt by Americans monthly. The index improved 7.2 points, or 10.7%, from 67.5 in November to 60.3 in December. The higher the number, the more stress. Readings above 50 signal increased stress, while those below 50 indicate lower stress, with 50 considered neutral.
For context, the last time the Index posted below 50.0 was before the onset of the pandemic in February 2020, when it stood at 48.1. The Index’s historical average since December 2007 stands at 60.2. December’s reading of 60.3 surpasses this historical average by a smidgen of 0.1%, indicating that Americans are experiencing normal stress levels. Notably, the Index peaked at 70.5 in October 2023, marking its highest reading since December 2008 (71.0). Since then, it has declined for the better, reaching 60.3 in December.
Inflation
The survey showed that 80% are worried about inflation. One-half (43%) are very concerned, and another 37% 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 2.6% in October 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.
Recession
One-third (34%) believe we are in a recession, while 37% think we are not. Another 29% are not sure. The share of Americans who think we’re in a recession has dropped from 47% in September to 34% in December.
Meanwhile, one-half (50%) think the U.S. economy is not improving, while 33% believe it is improving. The share of Americans having a positive view increased from 27% in November to 33% in December.
John Tamny, the editor of RealClearMarkets, observed:
Progress is as American as apple pie, and the only barriers to it are governmental. The change in sentiment signals a belief that the government was in the way in such a way that optimism was in decline. No longer, it seems. The speculation here is that the electorate feels Donald Trump governs better than he talks and that barriers to progress will soon enough be removed.
To conclude, Americans’ economic confidence has soared following the election of Donald Trump as the 47th president, with the optimism index hitting its 40-month high in December. However, the new president has his job cut out for him: 80% of Americans are worried about inflation, and another 75% are concerned about a slowdown in the next 12 months. Financial stress eased significantly in December, recording its 42-month low, a welcome sign of confidence Americans place in the new president’s economic policies.
Release Schedule Of RCM/TIPP Indexes For 2025
- Jan 25: Tuesday, January 14
- Feb 25: Tuesday, February 4
- Mar 25: Tuesday, March 4
- Apr 25: Tuesday, April 1
- May 25: Tuesday, May 6
- Jun 25: Tuesday, June 3
- Jul 25: Tuesday, July 1
- Aug 25: Tuesday, August 5
- Sep 25: Tuesday, September 2
- Oct 25: Tuesday, October 7
- Nov 25: Tuesday, November 4
- Dec 25: Tuesday, December 2
TIPP Takes
Geopolitics, Geoeconomics, And More
1. Israel Closes Embassy In Ireland Over Criticism Amid Gaza War – UPI
Foreign Minister Gideon Sa’ar ordered the closure of Israel’s embassy in Ireland, over the European nation’s recognition of a Palestinian state and criticism of the Middle Eastern country amid its war against Iran-backed Hamas.
“The actions, double standards and anti-Semitic rhetoric of the Irish government against Israel are rooted in efforts to delegitimize and demonize the Jewish state,” Sa’ar said in a statement.
2. Syria: Israel Plans To Double Golan Population – D.W.
The Israeli government has approved a plan to invest more than $11 million in the occupied Golan Heights and double the population in the region.
His office said Prime Minister Benjamin Netanyahu’s plan is a response to the “new front” with Syria. “Strengthening the Golan means strengthening Israel, and it is particularly important at this time,” Netanyahu said. The area would be “held on to, made to flourish and settled in,” he added.
3. Saudi Arabia Calls Israeli Golan Plan ‘Sabotage’ Of Syria – Al Arabiya
In a statement, the Saudi foreign ministry expressed “condemnation and denunciation” of the plan, which it called part of “continued sabotage of opportunities to restore security and stability in Syria” after opposition forces overthrew Bashar al-Assad one week ago.
Israel captured most of the strategic plateau from Syria in the 1967 Six-Day War, annexing it in 1981.
4. Turkey Willing To Mediate Between U.S. And New Syrian Administration: Top Diplomat – Al Arabiya
Turkish Foreign Minister Hakan Fidan said his country was willing to mediate between Washington and the new administration in Syria, adding that he doesn’t see Syria becoming an arena for conflicts.
As the circumstances surrounding ousted Syrian President Bashar al-Assad’s escape from Syria last week remain unclear, Fidan said that al-Assad received “an external call asking him to leave the capital, Damascus.”
5. Russia Evacuates Some Russian, Belarusian, North Korean Diplomats Out Of Syria – Reuters
A special Russian air force flight from the Hmeimim air base in Syria evacuated some of the Russian diplomatic personnel in Damascus as well as Belarus and North Korean diplomats, the Russian foreign ministry said.
The crisis situation department of the Russian foreign ministry said on its Telegram messaging channel, “The work of the Russian Embassy in Damascus continues.”
6. Ukraine Targets Russian Fuel Supply Lines To Zaporizhzhya – RFE/RL
Ukraine carried out a complex operation targeting fuel supply routes from the Russian-annexed Crimea to occupied areas of Zaporizhzhya, an informed source said.
The operation involved a sabotage mission to detonate railway tracks near Oleksyivka in the Bilmak district, derailing a train carrying fuel tanks. The operation was carried out by Ukraine’s Security Service in collaboration with military intelligence, special operations forces, and drone units.
7. Ukraine Military Releases Images Of North Korean Casualties In Kursk – RFA
Ukrainian forces released images and videos of what it said were the bodies of North Korean soldiers in Russia’s Kursk region after assaults on Saturday, with its defense intelligence estimating 200 Russian and North Korean military personnel were killed or wounded.
Ukrainian President Volodymyr Zelenskiy said that Russia had begun using North Korean troops in significant numbers for the first time to conduct assaults on Ukrainian forces battling to hold an enclave in Kursk, which Ukrainian forces invaded in early August.
8. China Retail Growth Slows, Agency Calls For 2025 Support – D.W.
Broadly positive Chinese economic data for November released on Monday showed slower-than-expected growth of 3.3% in retail sales, much slower than in October and well adrift of the 4.6% forecast.
The slowdown came as a surprise because Beijing has been working to boost stimulus programs and encourage consumption, as it braces for possible headwinds as Donald Trump returns for a second term as U.S. president, threatening increased tariffs.
A spokesperson for the National Statistics Bureau warned while presenting the data that protectionism was on the rise and the agency anticipated tougher conditions next year. They called for more efforts to promote economic recovery in 2025.
9. Inside China’s Data-Driven Hunt For Taxes On Overseas Gains – Nikkei Asia
China is prodding its citizens to pay taxes on overseas investment gains, as authorities harness big data’s power to close enforcement gaps.
Individuals profiting from a range of financial investments offshore – including insurance policies, family trusts and foreign stock trading – are receiving texts and notices from local tax offices asking them to conduct self-assessments on overseas capital gains over the past two years and settle any unpaid amount, multiple people familiar with the matter said.
10. Warren Buffett’s Warning to Wall Street has Reached Deafening Levels: 3 Things You Should Do Before 2025 – The Motley Fool
If you believe in Buffett’s ability to predict the market’s future, we should examine his recent moves closely.
Based on this, here are three things to ensure the strength of your portfolio, no matter what happens next in the market. 1. Keep cash readily available – Keep cash meant for investing, should any good buying opportunities arise. 2. Diversify your portfolio – While technology stocks may be driving gains in the market today, it’s important to diversify across sectors and stocks to maximize your chances for long-term gains and to minimize the risk of losses. 3. Think long-term – Like Buffett, remember to think long-term and not worry about short-term movements.
11. Bitcoin Rises To New Record Above $106,000 Ahead Of This Week’s Fed Decision – CNBC
Bitcoin rallied to a new all-time high Sunday evening as investors awaited the Federal Reserve’s expected interest rate cut later this week.
Investors are expecting the Fed to lower interest rates this week during its two-day policy meeting, which will conclude Wednesday. The CME Fedwatch tool currently forecasts a 96% chance of a 25-basis-points cut. That would likely be positive for the price of bitcoin, which often trades like a tech stock and therefore benefits from lower interest rates.
12. Bitcoin To Gold Ratio Posts New Record As BTC Sets New High – Cointelegraph
The Bitcoin to gold ratio is a metric that divides the price of Bitcoin by the cost of spot gold and represents the number of ounces of gold it takes to buy 1 BTC.
On Dec. 16, the ratio hit a new ATH at 40 gold ounces per BTC as Bitcoin peaked above $106,000 for the first time, with spot gold (XAU) trading at around $2,650.
13. Reiki Might Help Ease Pain For Cancer Patients – HealthDay News
“Outpatients receiving reiki during infusion reported clinically significant improvements in all symptoms, high levels of satisfaction and a qualitatively positive healing experience,” reported a team led by Natalie Dyer, of Connor Whole Health at the University Hospitals of Cleveland.
The Cleveland Clinic notes that reiki “has roots in ancient Japanese healing practices and is considered a form of energy healing. It stems from the Japanese words ‘rei,’ meaning universal, and ‘ki,’ meaning vital life force energy.”
Republished with permission from TIPP Insights
