So much for a happy New Year: In the midst of its worst stretch on record, consumer confidence starts 2009 at its lowest calendar-year opening in 23 years of weekly polls. But there is a faint glimmer in the gloom: slightly better ratings of the buying climate.
The ABC News Consumer Comfort Index stands at -49 on its scale of +100 to -100, unchanged from last week and within sight of its record low, -54 on Dec. 1. It's been -48 or lower since mid-October and -40 or worse since April 20, both low-streak records.
Positive ratings of the national economy this week match their all-time low, 6 percent, set last week. However, ratings of the buying climate, while just 26 percent positive, are their best since March, coinciding with post-Christmas retail discounts and lower gas prices. That comports with a report Tuesday from the International Council of Shopping Centers saying sales got a little lift the last week of December – but remained dismal overall.
The overall view is still grim. The CCI racked up its second worst annual average in 2008 and its worst ever quarter, averaging -50, in Q4. Compare that to its lifetime average, -11 in weekly polls since late 1985, much less its high, +38 in January 2000.
There are good reasons: The U.S. economy officially went into recession in December 2007, the Dow finished 2008 down 35 percent, the economy's shed nearly two million jobs, unemployment is at a 15-year high, home values declined by 12 percent last year, and, though gas prices have eased, they averaged $3.25 in 2008, the highest annual average in federal data since 1991.
INDEX – The CCI is based on Americans' ratings of the economy, their personal finances and the buying climate. Positive ratings of the national economy suffered the most in 2008, falling by 25 points through the course of the year and averaging just 15 percent, 24 points below the long-term average.
Positive ratings of the economy have been in single digits for nine weeks, exceeded only by a 13-week run in early 1992.
Twenty-six percent rate the buying climate positively, creeping up from its low of 18 percent in mid-October. However that's still 12 points lower than the long-term average. Positive ratings of the buying climate averaged 23 percent last year, the worst on record.
Forty-five percent rate their personal finances positively, the same as last week and 12 points off the long-term average. Half or fewer have rated their finances positively for 24 straight weeks, the worst such run since 1992-93.
TREND – While the CCI hasn't advanced much from its low, at least it's not getting worse, as it did so often in 2008. Before last year the index's all-time low was -50 in February 1992. Last year it fell that low or lower 10 times, setting or matching record lows four times. It was -50 or below steadily from mid-November to mid-December.
As noted, the CCI averaged -50 in Q4 2008, the worst quarter on record (previously -47 in Q1 1992). For the entire year it was -42, 2 points better than its worst year on record, 1992. Its best yearlong average was +29 in 2000.
GROUPS – The CCI has been negative across demographic groups for 28 weeks straight, surpassed only by a 33-week stretch in 1991-92. Income as usual marks the biggest gap; the index is -26 among people with the highest incomes compared with -77 among those with the lowest. It's -42 among people who've been to college vs. -68 among high-school dropouts, -56 among women vs. -40 among men, -65 among renters vs. -43 among homeowners and -46 among whites vs. -61 among blacks.
The index is -36 among Republicans this week, -44 among independents and -62 among Democrats. The 26-point difference between Republicans and Democrats compares with an average gap of 41 points for 2008 and 33 points since 1990.
Here's a closer look at the three components of the ABC News CCI:
NATIONAL ECONOMY – Six percent of Americans rate the economy as excellent or good, tying its record low last week. The highest was 80 percent on Jan. 16, 2000.
PERSONAL FINANCES – Forty-five percent say their own finances are excellent or good, the same as last week. The best was 70 percent, last reached in January 2000. The worst was 42 percent Dec. 1, 2008 and March 14, 1993.
BUYING CLIMATE – Twenty-six percent say it's an excellent or good time to buy things; it was 25 percent last week. The best was 57 percent on Jan. 16, 2000. The worst was 18 percent Oct. 19, Aug. 10 and Aug. 24, 2008.
METHODOLOGY – Interviews for the ABC News Consumer Comfort Index are reported in a four-week rolling average. This week's results are based on telephone interviews among a random national sample of 1,000 adults in the four weeks ending Jan. 4, 2009. The results have a 3-point error margin. Field work 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.