Consumer Confidence Dips to Two-Month Low

Aug. 15, 2006— -- Amid signs of a slowing economy and high gas prices, consumer confidence sunk to its lowest level in two months this week. And looking ahead, Americans remain bleak: Most believe the economy's getting worse.

The ABC News/Washington Post Consumer Comfort Index is now at -15 on its scale of +100 to -100, compared with -12 last week. It's down six points in the last month and is also six points off its long-term average. Confidence had held essentially stable throughout July, before showing signs of strain last week. Still, it's holding above its lowest level of the year,
-19 on May 21.

But most Americans don't see things improving soon. Fifty-four percent said the economy's getting worse, compared with just 15 percent who believe it's getting better. A steady majority has been pessimistic since May.

INDEX -- The CCI is based on Americans' ratings of the national economy, the buying climate and their personal finances. Thirty-six percent said the national economy is in good shape, down four points from early July. Just 33 percent said it's a good time to buy things, down six points from early July. Positive ratings of personal finances, now at 59 percent, have been steadier.

EXPECTATIONS -- At 54 percent, pessimism about the direction of the economy is well above its 25-year average of 39 percent but still not as high as it was last September, just after Hurricane Katrina, when 60 percent said the economy was getting worse.

As noted, most have been pessimistic about the economy since May. But there are regional differences: Six in 10 in the Northeast said the economy's weakening, as did 58 percent in the South and 56 percent in the Midwest. Just 39 percent of people in the West agree.

TREND -- At -15, the index is three points off its average so far this year. It's been as high as -7 this year (in March and again in April) and, as noted, as low as -19 in May. It recovered to its 20-year average of -9 in July, before dipping again.

Its all-time high was +38 in January 2000; its record low, -50 in February 1992.

GROUPS -- As usual, the index is higher in better-off groups. It's +41 among higher-income Americans while
-71 among those with the lowest incomes, -3 among college graduates while -46 among those who haven't finished high school, -11 among whites but -42 among blacks and +2 among men while -29 among women.

Similar to expectations, the index is best in the West, at -4, compared with -16 in the Midwest, -17 in the South and -20 in the Northeast. A partisan component to consumer confidence continues: The index is +12 among Republicans but -19 among Independents and -29 among Democrats. Still, the gap between Republicans and Democrats is smaller than it's been.

Here's a closer look at the three components of the ABC/Post CCI:

NATIONAL ECONOMY -- Thirty-six percent of Americans rate the economy as excellent or good; 37 percent rated it so last week. The highest percentage of Americans rating the economy as excellent or good was 80 percent on Jan. 16, 2000. The lowest was 7 percent in late 1991 and early 1992.