Consumer Confidence Takes a Hit
April 25, 2006— -- Spiking prices at the pump appear to be taking a toll on consumer confidence: The ABC News/Washington Post Consumer Comfort Index sustained an unusual drop this week, falling to its lowest level in two months.
The index dropped four points to -11 on its scale of +100 to -100; it's fallen this much in a single week just four other times in the past year and just 70 times in more than 20 years of weekly polls. Last week, before this drop, it had matched its best level since late 2004.
Consumer confidence has historically been sensitive to high gas prices, and they're high now, averaging $2.91 a gallon, up 67 cents in the last two months and 33 cents in just the past three weeks, according to federal government data. The last time gas prices jumped this fast, late last summer, the ABC/Post index lost 16 points in five weeks.
Given its history, the index bears watching, both for economic reasons and, in a midterm election year, political ones. While gas prices are a strong negative, other factors -- including employment and incomes -- are more positive, and the ABC/Post CCI remains near its long-term average, -9 in weekly polls since late 1985. Still, if it were to go steeply south, incumbents in general, and the in-party in particular, could pay a price.
Gasoline prices are President Bush's single weakest issue -- three in four Americans in an ABC/Post poll earlier this month disapproved of how he's handling them. Bush today announced measures, including an investigation of gasoline pricing and a temporary halt in deposits to the country's strategic petroleum reserve.
INDEX -- The weekly CCI is based on Americans' ratings of the national economy, the buying climate and personal finances. This week 39 percent rate the economy positively, and 36 percent call it a good time to buy things. As usual, more, 59 percent, say their own finances are in good shape.
TREND -- The index is close to its low this year of -13 on three dates in January and February. It's been as high as -7 as recently as last week, and has averaged -10 this year, about the same as its -9 average since December 1985. Its all-time high was +38 in January 2000; its all-time low, -50 in February 1992.
GROUPS -- As usual, the CCI is higher in better-off groups. It's +35 among higher-income Americans while -50 among those with the lowest incomes, +1 among college graduates while -34 among those who haven't finished high school, -5 among whites but -51 among blacks and +3 among men while -22 among women.
Regionally, the index is best in the West (+1) and lowest in the Northeast (-19). And huge partisan splits remain. The CCI is +30 among Republicans but -21 among Independents and -35 among Democrats.
Here's a closer look at the three components of the ABC/Post CCI:
NATIONAL ECONOMY -- Thirty-nine percent of Americans rate the economy as excellent or good; it was 41 percent last week. The highest was 80 percent on Jan. 16, 2000. The lowest was 7 percent in late 1991 and early 1992.
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