In what could signal a challenging season for holiday retailers, consumer confidence took a sharp fall this week, sinking to its 18-year average after a month of improvement.
The ABC News/"Money" magazine Consumer Comfort Index dropped five points to -9 on its scale of +100 to -100. It’s fallen that far in a single week only 23 times in 988 weeks of ongoing ABC/"Money" polls.
The drop muddies an outlook that had looked cheery for retailers; it follows reports from two industry groups of lackluster sales compared to last year’s post-Thanksgiving period. Pricing may be one issue; Wal-Mart reacted to weaker-than-expected weekend sales by saying it will lower prices to attract more holiday shoppers.
Confidence also has been sensitive to gasoline prices, which dropped by 8 cents in the last month, then held steady this week at an average $1.95 per gallon. While this may have encouraged Thanksgiving travel -- reportedly its highest since 2000 -- a gallon of gas still is 46 cents more expensive now than at this time last year.
The index’s fall occurred almost entirely in the West. (Gasoline prices are higher there -- an average of $2.16 per gallon, or 21 cents over the national average.) It makes a yo-yo for confidence: The index jumped by six points heading into the election (it’s risen that far in one week only six times since 1985), only to turn and drop by five points this week. There’s no consistent pattern in previous post-Thanksgiving ABC/"Money" polls.
INDEX -- The ABC/"Money" index is based on Americans’ ratings of the current economy, buying climate and personal finances. Its -9 today is down from -4 last week and -5 a month ago, and similar to its level after last Thanksgiving, -11.
Forty percent of Americans rate the national economy positively -- down three points this week. Thirty-nine percent call it a good time to buy things, unchanged; and 58 percent say their personal finances are in good shape, compared with 60 percent last week. The finances rating is just a point from its 18-year average, while the other two match their averages precisely.
TREND -- The index’s 2004 peak was -3 last January; its lowest this year, -22 in March; and it’s averaged -11 this year. Those compare to an all-time high of +38 in January 2000 and a low of -50 in February 1992.
The 2004 average will beat the average of -19 in 2003. The index’s best yearly average was +29 in 2000; its worst, -44 in 1992.
GROUPS -- As noted, the index’s fall this week occurred mainly in the West, where it’s now -21, compared with -15 in the Northeast, -10 in the Midwest and a rosier +3 in the South.
As usual, confidence is stronger among better-off Americans. The index is +41 among higher-income people while -38 among those with the lowest incomes; +3 among college graduates while -31 among high-school dropouts; -5 among whites but -24 among blacks; and +2 among men but -19 among women.
As has been the case all year, the index is far higher among Republicans (+23), than independents (-14) or Democrats (-36). But as noted, that’s less of a gap than at its peak, +43 among Republicans and -47 among Democrats in July.
Here's a closer look at the three components of the ABC/Money index:
NATIONAL ECONOMY -- Forty percent of Americans rate the economy as excellent or good; it was 43 percent last week. The highest was 80 percent on Jan. 16, 2000. The lowest was 7 percent in late 1991 and early 1992.
PERSONAL FINANCES -- Fifty-eight percent say their own finances are excellent or good; it was 60 percent last week. The best was 70 percent on Aug. 30, 1998, matched in January 2000. The worst was 42 percent on March 14, 1993.
BUYING CLIMATE -- Thirty-nine percent say it’s an excellent or good time to buy things; unchanged from last week. The best was 57 percent on Jan. 16, 2000. The worst was 20 percent in fall 1990.
METHODOLOGY -- The ABC News/Money magazine Consumer Comfort Index represents a rolling average based on telephone interviews with a random sample of about 1,000 adults nationwide each month. This week's results are based on 1,000 interviews in the four weeks ending Nov. 28, 2004, and have an error margin of plus or minus three percentage points. Field work by ICR-International Communications Research of Media, Pa.
The ABC/"Money" index is derived by subtracting the negative response to each index question from the positive response to that question. The three resulting numbers are then 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.
See previous analyses in our Poll Vault.