Economic Pessimism Eases; Confidence at 2009 High

March 17, 2009 — -- Economic pessimism has eased to a two-year low and confidence has inched up to its best level in five months, but the public's outlook remains largely negative as confidence lingers near its record low.

Five months ago, during the meltdown in the financial and banking markets, economic pessimism spiked to its worst in 28 years. Now expectations have improved with fewer than half, 48 percent, saying the economy will get worse, down 10 points in a month to its lowest level since April 2007.

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Even though pessimism has backed off, the public remains generally negative. The ABC News Consumer Comfort Index stands at -47 on its scale of +100 to -100, its highest since early October. The index has pushed above the dreaded -50 level for the past month after its worst stretch ever from mid-January to mid-February. Still, confidence is only 7 points from the record low of -54 on Jan. 25.

The slight reprieve in confidence coincides with a rally in the stock market. Last week the Dow Jones had its first four-day winning streak in over three months and finished at its highest since Feb. 25. But the history of the CCI shows a weak relationship to stock trading. A more relevant measure to consumers is the unemployment rate and that one remains dismal. At 8.1 percent, unemployment is at a 25-year high.

INDEX – The CCI is based on Americans' ratings of the economy, their personal finances and the buying climate. Ratings of personal finances have held steady for three weeks at 48 percent positive, 7 points from their low in late January and 9 points below the long-term average in weekly polls since late 1985. Fewer than a majority have rated their own finances positively for 34 weeks straight, surpassed only by a 40-week run in 1992-93.

One in four Americans rate the buying climate positively, 13 points from the long-term average and just 7 points from the low in October and August. Fewer than a third of Americans have said it's a good time to buy things for 70 weeks, second only to a stretch from 1990-93.