Confidence Struggles Ahead

May 12, 2009 — -- Dismal in historical terms, consumer confidence nonetheless has run up its best four-week stretch since September, setting a 2009 high for the third week in a row.

The ABC News Consumer Comfort Index now stands at -42 on its scale of +100 to -100, up 9 points in a month to its best since last fall. The progress has been incremental, with little week-to-week change, but the overall movement is a positive glimmer in a year that's seen the worst rating in 23 years of weekly polls, -54 in late January.

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The past month's improvement stems mostly from better ratings of personal finances, now 52 percent positive, their best since July. Fewer than half as many, 25 percent, call it a good time to buy things, stagnant over the last four weeks. In a third gauge, one in 10 rates the national economy positively, the first time this measure has cracked double digits since early November, albeit a whopping 90 percent negative.

Another indicator also suggests potential improvement: The Bureau of Labor Statistics last week reported 539,000 jobs lost in April - hardly good, but dramatically better than recently, and the slowest pace of job loss in six months. At the same time, unemployment is now 8.9 percent, the highest in 25 years.

TREND – The index has been improving after hitting -51 last month; it hasn't moved up this far this fast since September, and hasn't lost any ground in this period, another best since September. Over the past month, it's risen most sharply in the West and among men.

While at a seven-month high, confidence is hardly out of the woods. At -42, the index is 31 points below its long-term average, and matches its 2008 average – itself the second worst on record, after 1992's -44.

The CCI has been below -40 for 55 consecutive weeks, a record, and hasn't seen positive territory since March 2007. It remains vastly below the best yearlong average, +29 in 2000, and the best week, +38 in January 2000.

INDEX – The index, as noted, is based on Americans' ratings of the national economy, their personal finances and the buying climate. Positive views of the economy, at 10 percent, are their highest in six months, breaking a record 26 weeks in the single digits. But it's also the weakest of the three measures, 28 points below the long-term average.

Twenty-five percent say it's a good time to buy things, about where it's been for the past month, 12 points below the long-term average and just 7 points above the record low reached in October and August.

The index has been buoyed chiefly by better ratings of personal finances; this is the second week in which more than half rate their own finances positively, breaking a 40-week stretch below a majority. The current 52 percent positive measure is 6 points above the 2009 average and just 5 points below the long-term average.

GROUPS – As usual, the CCI is higher among better-off groups, but negative across groups for the 11th straight week, with an unusually large gender gap. It's -28 among men – their best since April 2008 – while -54 among women, the largest gender gap since May 2007, and 9 points higher than the average difference in available data since 1990.