Consumer Confidence Returns to 2006 High Point

Feb. 21, 2007 — -- For the first time this year consumer confidence has broken through to positive territory, equaling the high of 2006.

The ABC News/Washington Post Consumer Comfort Index stands at +1 on its scale of +100 to -100. Since mid-November of last year it's bounced between the positive and negative range. It dipped to -5 at the beginning of the year, but has rebounded to match its recent highs.

Not all the news is good. At the same time the CCI turned positive, a growing number of people say the national economy is getting worse: 41 percent say so, compared to about a third last month.

The CCI is trending above its long-term average, -9 in weekly polls since December 1985, and well up from its 2006 low of -19 in August. The return to the positive side is the fifth trip there in the last four months.

INDEX -- The index is based on Americans' ratings of the national economy, the buying climate and their personal finances. This week, 48 percent rate the economy positively, matching its five-year high of 48 percent, also reached on Dec. 17, and eight points above the long-term average.

Sixty-four percent rate their personal finances positively, compared with a long-term average of 57 percent. (It hit 65 percent in mid-November, the most since August 2001.) And 40 percent call it a good time to buy things, about the average.

DIRECTION -- Each month the ABC/Post poll measures expectations -- whether people think the economy is getting better, getting worse or holding steady. Forty-one percent now say it's getting worse, significantly higher than where it was -- 34 percent -- in January and December 2006. For the last six months, the difference between those saying the economy was getting better and getting worse was narrowing or holding steady; today that trend is in the opposite direction.

The current number rating the economy as getting worse -- 41 percent -- is no different than usual; 39 percent have been pessimistic on average in polls dating back 25 years. Fewer, just 16 percent (about what it's been the last few months), think the economy's improving. Forty-one percent says it's holding steady.

TREND -- A rally in the last quarter of 2006 lifted the index into the positive range, from -19 on Aug. 27, amid soaring gasoline prices, to +1 in November and December. That trend flattened, and then turned south before returning to the positive side this week.

GROUPS -- The index is higher in better-off groups -- far better among higher-income Americans, college graduates and whites. It's +7 among men and -3 among women, the highest it's been since Nov. 2001.

Partisan differences remain, but have eased. The CCI is +30 among Republicans, -4 among independents and -13 among Democrats. That 43-point gap between Republicans and Democrats is its smallest since mid-August, albeit still bigger than its long-term average, 31 points. It peaked at 90 points in July 2004.