RCM/TIPP Economic Optimism Index

What is RCM/TIPP Economic Optimism Index?

The RCM/TIPP Economic Optimism Index tracks US consumer confidence, or how hopeful Americans feel about the economy. A monthly TIPP Poll of 1300 adults nationwide feeds it through an online survey. TechnoMetrica Market Intelligence runs it through its TIPP polling unit, with RealClearMarkets as sponsor.

It averages 3 opinion parts into a 0 to 100 score where 50 is neutral. It captures sentiment, or views, not output such as spending or jobs. It stands apart from the Conference Board and University of Michigan confidence surveys, though it often foreshadows them as an early spending signal.

When is it released and what happens each release?

Fieldwork runs over 2 to 3 days early in the month, before the monthly release. The index appears each month at 10:00 AM ET on RealClearMarkets. Each release reports a fresh survey with no revised versions.

Each release shows the 3 parts, 21 demographic groups, and splits for investors and parties. Investors are people who hold 10000 dollars or more in stocks. It also shows 3-month, 6-month, and 12-month averages, topical answers, and the separate Stress Index where higher means more stress. Topical answers cover subjects such as inflation worries.

What moves RCM/TIPP Economic Optimism Index?

The 3 equal opinion parts drive the headline, so a move in any part moves the average. Each part reflects views over the next 6 months or views on policy.

• Six-Month Economic Outlook: how consumers see national economic prospects over the next 6 months.

• Personal Financial Outlook: how Americans feel about their own finances over the next 6 months.

• Confidence in Federal Economic Policies: views on how effective federal economic policies are.

The headline averages all 3 parts, so one part never equals the headline. A weak part can sit inside a strong headline, and the reverse can also happen.

How is RCM/TIPP Economic Optimism Index calculated?

1. Component score: Each of the 3 questions becomes a 0 to 100 score. Replies of not sure and no answer are ignored.

1. Three-option formula: For the two outlook questions, each with one positive and one negative answer, K equals 50 plus 0.5 times the positive-negative gap. For example, 30% better and 45% worse gives 50 plus 0.5 times 30 minus 45, which is 42.5. A second case with 35% better and 30% worse gives 52.5.

1. Four-option formula: For the policies question, strong views count double. The score is 50 plus 0.5 times the strong gap plus 0.25 times the mild gap. With 10% very satisfied, 25% somewhat satisfied, 30% not very satisfied, and 35% not at all satisfied, the score is 36.25.

1. Headline average: The 3 parts are averaged with equal weight. No seasonal adjustment is described. With parts at 42.5, 52.5, and 36.25, the headline is 42.5 plus 52.5 plus 36.25 divided by 3, which is 43.8, below 50.

1. Scale anchors: Above 50 means more positive than negative replies. A reading of 50 is neutral. Full positive is 100 and full negative is 0.

Key point: It tracks how hopeful Americans feel, not how the economy performs. It only foreshadows the Michigan and Conference Board gauges, and it averages all 3 parts, so one strong part never equals the headline.