Consumer Confidence Advances Again

Consumer confidence jumped again this week, continuing an extraordinary rally that has pushed the ABC News/Washington Post Consumer Comfort Index into positive territory for the first time in four and a half years -- just in time for the holiday shopping season.

The index stands at +1 on its scale of +100 to -100, up four points to its best since April 2002. It's soared by 20 points since the end of August, and now stands 10 points above its long-term average in weekly polls since December 1985.

Breaking into positive territory is an important milestone: The index was positive in the economy's go-go days from spring 1997 to fall 2001, but otherwise only briefly in mid-1986 and spring 2002.

And as ratings of current economic conditions improve, so have expectations. The number of Americans who think the economy's worsening is the fewest in nearly two years.

Several positive economic reports buttress the rise in consumer confidence. Wholesale prices dropped 1.6 percent in October, matching the largest-ever one-month drop in the report's 59-year history. That includes gasoline prices, now averaging $2.23 a gallon, down from $3.04 in August.

While there's a continued sharp division in consumer confidence, its gains have been bipartisan. In the last six weeks the index has jumped 13 points among Republicans, 18 points among Democrats and 15 points among independents. Indeed, despite their election gains, Democrats' ratings of current economic conditions have held about steady (a CCI of -19 this week vs. -22 last week), as have Republicans' (+42 vs. +38).

INDEX -- The CCI is based on Americans' ratings of the national economy, the buying climate and their personal finances. This week 65 percent say their own finances are in good shape, up 10 points in the last six weeks. Forty-six percent rate the economy positively, up 13 points since late August to the most in more than five years. And 40 percent call it a good time to buy things, up eight points since late August.

DIRECTION -- Separately each month the ABC/Post poll measures expectations – whether people think the economy is getting better, getting worse or holding steady. Thirty-seven percent now say it's getting worse, down from 45 percent last month and 54 percent in August to the fewest since January 2005.

That's about average -- 39 percent have been pessimistic on average in polls dating back 25 years. As usual, fewer -- just 19 percent -- think the economy's improving. The rest, 42 percent, say it's holding steady.

Fifty-four percent of Democrats say the economy's getting worse -- down from 60 percent last month, but still a majority. The main change was among independents; 37 percent are now pessimistic, down from 53 percent last month.

TREND -- As noted, the CCI is now 20 points above its low for the year, reached in May and again in August amid soaring gas prices. It's four points better than its previous 2006 high, reached two weeks ago.

Its all-time high was +38 in January 2000; its record low, -50 in February 1992. Its career average is -9; its average so far this year is -11.

GROUPS -- As usual, the index is higher in better-off groups. It's +55 among higher-income Americans while -44 among those with the lowest incomes, +18 among college graduates while -29 among those who haven't finished high school, +9 among whites but -41 among blacks and +9 among men while -6 among women.

The index is +6 in the South and West alike, compared with 0 in the Northeast and -12 in the Midwest.

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

NATIONAL ECONOMY -- Forty-six percent of Americans rate the economy as excellent or good; it was 44 percent 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.

PERSONAL FINANCES -- Sixty-five percent say their own finances are excellent or good; it was 64 percent last week. The highest percentage who said their finances were excellent or good was 70 percent on Aug. 30, 1998, matched in January 2000. The lowest was 42 percent on March 14, 1993.

BUYING CLIMATE -- Forty percent say it's an excellent or good time to buy things; it was 38 percent last week. The highest percentage was 57 percent on Jan. 16, 2000. The lowest was 20 percent in the fall of 1990.

METHODOLOGY -- Interviews for the ABC News/Washington Post Consumer Comfort Index are reported in a four-week rolling average. This week's results come from telephone interviews among a random national sample of 1,000 adults in the four weeks that ended Nov. 12, 2006. The results have a three-point error margin. The expectations question was asked of 500 respondents Nov. 1-12; that result has a 4.5-point margin of error. Field work was done by ICR-International Communications Research of Media, Pa.

The index is derived by subtracting the negative response to each index question from the positive response to that question. The three resulting numbers are added and divided by three. The index can range from +100 (everyone positive on all three measures) to -100 (all negative on all three measures). The survey began in December 1985.

Click here for PDF version with charts and data table.

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