POLL: Confidence a Point from its Worst; Easing Gas Prices Don't Help

August 12, 2008 — -- Consumer confidence has dropped to within a point of its record low in 22 years of weekly polls, unaided by easing gasoline prices. Ratings of the buying climate set a new low, with just 18 percent of Americans calling it a good time to spend money.

The ABC News Consumer Comfort Index stands at -50 on its scale of +100 to -100, a whisker from its all-time low of -51 on May 25. The index had regained 10 points in June and early July, but then slid back the past three weeks.

The CCI, based on ratings of the national economy, buying climate and personal finances, last was this low in early 1992, on the heels of the 1990-91 recession. It's averaged -10 in weekly polls since late 1985, peaking at +38 in January 2000 – a far cry from its current dire condition.

While gas is down from its record high in mid-July, it still averages $3.81 a gallon, 37 percent higher than a year ago. And other economic factors are at play, including seven straight months of job losses, tight credit, a depressed housing market and rising inflation. Unemployment is its highest in four years, 5.7 percent.

Rising gas prices and worsening confidence are highly correlated, but there can be a lag in recovery. After gas prices peaked in 2007 and subsequently declined, confidence languished for another two months. There were similar patterns in 2005 and 2006 – and those were without the other negative factors at play today.

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INDEX – This is the 18th straight week that fewer than a quarter of Americans have rated the buying climate positively, matching the record set during the 1990-91 recession; as noted, a record low 18 percent say it's a good time to buy things.

Only one in 10 rate the economy positively, 29 points below the long-term average and only 3 points from the all-time low in late 1991 and early 1992. It's been at or below 15 percent for 18 straight weeks, the longest run since 1992.

Fewer than half, 47 percent rate their personal finances positively, down 11 points this year and 10 points below the long-term average. Apart from this year, the last time fewer than half of Americans rated their personal finances positively was in late 1993.