Confidence Flirts with Record Low
Twenty-Two Percent Rate the Buying Climate Positively
Analysis by Peyton M. Craighill
July 7, 2009
Consumer confidence is within striking distance of its worst in weekly polls since late 1985 for the third straight week.
The ABC News Consumer Comfort Index stands at -52 on its scale of +100 to -100, 2 points from the lowest on Jan. 25. The index has spent the last three weeks below -50, territory it's seen only 14 times in over 1,220 weeks of polls, with eight of those coming this year alone.
Positive ratings of the buying climate dropped this week, down 4 points to 22 percent, matching the largest one-week drop ever. In 23 years of weekly polls it's fallen this far this fast only eight other times. The other two components of the index – ratings of the economy and personal finances – held near their historic lows.
Continued weakness in the job market isn't helping confidence. The unemployment rate increased in June to 9.5 percent, the highest in 26 years. In a separate measure, the government reported that 467,000 jobs were lost last month, surpassing analysts' expectations. In the first half of the year, 3.4 million jobs have been cut from the nation's payrolls.
INDEX – Ratings of personal finances, typically the best of the CCI's three measures, plunged from a yearly high of 52 percent positive on May 10 to a record low of 39 percent positive for the last two weeks. This week 42 percent rate their finances positively – not much better than the low and 15 points below average.
As noted, ratings of the buying climate, at 22 percent positive, fell 4 points from last week to their lowest in three months. That's 4 points from the low last fall and 15 points below average.
Only 8 percent rate the economy positively, in single digits for 37 of the last 39 weeks and 30 points below average.
TREND – Since reaching its 2009 high on May 10, confidence has dropped 10 points. Its current three-week stretch below -50 is the worst spell since a four-week run from late January to early February, when it hit its lowest, -54.
The index is on pace for its worst year ever. Its average of -49 so far is 37 points below its long-term average of -12, 7 points below last year's average of -42 and 5 points below its 1992 average of -44, the worst full year.
It's been below -40 for a record 63 weeks, and hasn't seen positive territory since March 2007. It's miles below its record high, +38 in January 2000.
GROUPS – The index is higher as usual among better-off Americans, but negative across the board for the 19th straight week, as it's been for all but two weeks this year.
It's -27 among those with the highest incomes (the worst since January) but -67 among those with the lowest, the narrowest gap since December; -42 among those who've attended college vs. -64 among high school dropouts; -42 among men while -60 among women (a new low); -44 among homeowners compared with -71 among renters (the worst since December); and -51 among whites (1 point from the low) and the same among blacks, only the fourth time they've been equal in available data since 1990 (the average racial difference is 28 points).
There are partisan disparities, with the index at -38 among Republicans vs. -59 among Democrats (the worst since April) and -53 among independents (also the worst since April). With Republicans only 4 points from their low, the 21-point partisan gap is 20 points narrower than last year's average; the long-term difference in data since 1990 is 32 points.
Here's a closer look at the three components of the ABC News CCI:
NATIONAL ECONOMY – Eight percent of Americans rate the economy as excellent or good, the same as last week. The highest was 80 percent Jan. 16, 2000. The worst was 4 percent Feb. 8, 2009.
PERSONAL FINANCES – Forty-two percent say their own finances are excellent or good; it was 39 percent last week, the record low. The best was 70 percent, last reached in January 2000.
BUYING CLIMATE – Twenty-two percent say it's an excellent or good time to buy things; it was 26 percent last week. The best was 57 percent on Jan. 16, 2000. The worst was 18 percent last reached Oct. 19, 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 July 5, 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.