Misery and Company

Misery loves company: Home sales, employment and GDP data caught up in the past week to where consumer sentiment long has labored – in deep trouble, and with a potential political price to be paid.

The latest ABC News consumer survey finds economic sentiment flat, but “prone” may be the better description. Eighty-nine percent of Americans say the economy’s in bad shape, 73 percent call this a bad time to make purchases and 55 percent rate their personal finances negatively. 

The Consumer Comfort Index, based on these gauges, stands at -45 this week on its scale of +100 to -100 – a bit better than its -50 at the start of the month, but dismal by any standard. Just 9 points from its record low, it’s 32 points worse than average in weekly polls since late 1985.

With election season gearing up, incumbents could suffer, given the CCI’s correlation with the rate at which House incumbents are re-elected in midterm elections, .83. In 1992, when the CCI’s yearly average was -44, only 88 percent of House incumbents seeking re-election held on to their seats, the lowest rate since 1970. Compare that to the go-go days of 1998 – a CCI of +24, and a House re-election rate of 98 percent.

The CCI’s current yearly average is -46.

As noted, other data underscore the index’s weak reading. Existing home sales dropped a record 27.2 percent in July; new home sales, down 32.4 percent from last year to their lowest in 40 years. Unemployment remained at 9.5 percent, but the four-week average of new claims rose to a nine-month high. And seasonally adjusted GDP fell to 1.6 percent, below estimates (2.4 percent) and down from the first quarter’s 3.7 percent.

Click here for tables with this week’s CCI data.