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Economic Optimism Slips As Rich React To Biden Tax Hikes

That may reflect some Americans facing tighter finances after spending their government stimulus checks. Checks of $1,400 per person began arriving shortly after President Biden signed the $1.9-trillion stimulus into law on March 11.

After March’s 916,000 job gain, Wall Street expects Friday’s jobs report to show the U.S. economy added another 938,000 jobs in April.

Still, the jobs recovery has a long way to go. The IBD/TIPP Poll finds that 41% of households have at least one member who is out of work and looking for employment, unchanged from April. Another 30% are concerned about job loss in the household, down from 35%. Factoring in the overlap, the share of job-sensitive households is currently 50%, down three points from April.

Investors Less Bullish On U.S. Economy

U.S. economy optimism among investors fell from rare heights in May after hitting a 19-year high in April. Among Americans with at least $10,000 in household-owned equities or mutual funds, the IBD/TIPP Economic Optimism Index slumped 5.3 points to 59.7.

Noninvestors, who have borne more of Covid’s negative effects, grew a touch more hopeful, building on April’s stride into optimistic territory. Among noninvestors, the IBD/TIPP index rose seven-tenths of a point to 51.9. That’s the highest consumer confidence reading among noninvestors since February 2020, before the first U.S. Covid cases were identified.

2020 Election Shifts Views Of U.S. Economy

Political views are always a factor in how Americans view the U.S. economy. Under President Obama, Republicans were invariably more downbeat about the outlook, just as they had been more optimistic under President Trump until his defeat began to sink in by December’s IBD/TIPP Poll.

In May, optimism among Democrats eased 1.5 point to 72.3 after hitting an eight-year high in April. Republicans remain in a funk, with an IBD/TIPP Economic Optimism Index reading of 36.9, unchanged on the month.

Meanwhile, the IBD/TIPP consumer confidence gauge fell 2.8 points to 44.3 among independents.

Economic Optimism Index Components

The IBD/TIPP Economic Optimism Index is a composite of three major subindexes. They track views of near-term prospects for the U.S. economy, the outlook for personal finances and views of how well government economic policies are working.

The six-month outlook for the U.S. economy fell 2.7 points to 53.2, after hitting a Covid-era high in April. The six-month economic outlook index hit a 14-year high of 57 in February 2020, then tumbled as low as 37.3 in July.

The personal finances subindex slipped three-tenths of a point to 57. The index hit a crisis low of 49.8 in June. January 2020 saw a 15-month high of 64.6 points before the coronavirus pandemic took hold.

The federal policies subindex fell 2.9 points to 53.1, after hitting a 14-month high in April. The 57.9 reading in February 2020, before the coronavirus hit, was the highest since June 2002.

The May IBD/TIPP Poll reflects online surveys of 1,300 adults from April 28-30.

Please follow Jed Graham on Twitter @IBD_JGraham for coverage of economic policy and financial markets.

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