Consumer Confidence Shows Some Strain

Aug. 8, 2006— -- Consumer confidence is showing strain. Faced with the highest gas prices since Hurricane Katrina, soft job growth, and a cooling economy, it has slipped to its lowest level in seven weeks.

The ABC News/Washington Post Consumer Comfort Index stands at -12 on its scale of +100 to -100 this week, inching out of the -9 to -11 range at which it has hovered since late June.

But the index is still better than its 2006 low, -19 in May, despite some discouraging trends. Gas prices advanced this week to $3.04 a gallon, just short of post-Katrina prices -- and gas prices are expected to go higher, given BP's long-term shutdown of production in Alaska's Prudhoe Bay so that it can make pipeline repairs.

Additionally, the Labor Department's latest monthly jobs report found tepid job growth. And the Fed cited a cooling economy Tuesday when it opted not to raise interest rates for the first time in more than two years.

INDEX -- The CCI is based on Americans' ratings of the national economy, their personal finances, and the buying climate. Ratings of finances, 61 percent positive, are running above their long-term average since late 1985. But positive ratings of the buying climate (34 percent) and national economy (37 percent) are below average.

TREND -- The index started the year at -8 and peaked at -7 in March and again in April. It dropped to -19 in May before climbing back to its 20-year average of -9 in July. Its all-time high was +38 in January 2000; its record low, -50 in February 1992.

The CCI customarily is sensitive to gasoline prices; its relative resilience in the past month and a half suggests that Americans may be adapting to higher prices at the pump.

GROUPS -- As usual, the index is higher in better-off groups. It's +34 among higher-income Americans while
-71 among those with the lowest incomes, +2 among college graduates while -48 among those who haven't finished high school, -8 among whites but -44 among blacks and +7 among men while -29 among women.

Regionally, the index is best in the West, at +1, compared with -13 in both the Northeast and Midwest and -18 in the South. A partisan tendency in consumer confidence continues: The index is +18 among Republicans but -19 among Independents and -29 among Democrats. Still, this week's 47-point gap between the parties is smaller than it has been in recent months. (Last week saw a 58-point gap.)

Here's a closer look at the three components of the ABC/Post CCI:

NATIONAL ECONOMY -- Thirty-seven percent of Americans rate the economy as excellent or good; 39 percent rated it so last week. The highest percentage of Americans rating the economy as excellent or good was 80 percent on Jan. 16, 2000. The lowest was 7 percent in late 1991 and early 1992.