Dec. 23, 2008 -- After six weeks locked in its worst stretch ever, consumer confidence has eased off the floor. But it's hardly cause for holiday cheer.
The ABC News Consumer Comfort Index stands at -48 on its scale of +100 to -100, up 4 points in two weeks and 6 points in three weeks from its record low, -54, at the start of the month. But those compare miserably to its 23-year average, -11.
The CCI's six-week stretch at or below -50 was unprecedented: It's been that low only 11 times in 1,200 weeks of ongoing polls, 10 of them this year.
The gain this month may reflect a number of factors. In an effort to stimulate bank lending the Federal Reserve cut a key interest rate to below 1 percent for the first time; gas prices have fallen for 24 weeks to $1.65 a gallon, down from $4.11 at their peak in July; and retailers are slashing prices to stimulate last minute shoppers. On the other hand recession is well underway, with the highest unemployment in 15 years, depressed home sales and values and declining GDP.
INDEX – The CCI is based on Americans' ratings of the economy, their personal finances and the buying climate. Just 8 percent rate the economy positively, the weakest of the three measures, a point from its record low.
Indeed positive ratings of the economy have bounced between 7 and 8 percent for the last six weeks; they're down 23 points on the year and 31 points off the long-term average.
Twenty-four percent rate the buying climate positively, down 7 points this year and 14 points below average. Twenty-five percent or fewer have rated the buying climate positively for 38 straight weeks, the longest such run on record.
Forty-six percent rate their personal finances positively, down 12 points this year and 11 points off the average. Fewer than a majority have rated their finances positively for 22 weeks, the longest such stretch since 1992-93.
TREND – The slight relief isn't nearly enough to rescue a terrible year. At -48 the CCI is 6 points below its 2008 average – and in this year alone the index established or matched a record low four times; the previous low heading into 2008 had held for 16 years.
Starting the year at -20, the CCI headed down to -37 in February, popped back up in March, shot back to a record low -51 in May, recovered to -41 in July and September, but then weakened again. It was -50 or below from mid-November to last week.
The index has averaged -42 all year, very near its worst year on record, -44 in 1992. Its best yearlong average was +29 in 2000; its best week, +38 in January 2000.
GROUPS – The CCI has been negative across demographic groups for 26 straight weeks. Income as usual marks the biggest gap; it's -23 among people with the highest incomes compared with -54 among those with the lowest. The index is -44 among people who've been to college vs. -51 among high-school dropouts (their best, however, in more than six months); and -58 among women vs. -37 among men (their best rating in two months). It's -61 among renters vs. -43 among homeowners.
Most unusual is the lack of a racial gap this week, with an index of -47 among blacks and whites alike, its best among blacks since April. Only once before, on Nov. 3, 1996, has the CCI been the same among blacks and whites in available data since 1990; the average gap has been 29 points.
Partisan differences have been narrower than usual in December, with the index at -36 among Republicans this week, -45 among independents (their best in two months) and -56 among Democrats.
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; it was 7 percent last week when it matched its low – also set in late 1991 and early 1992, and matched this Nov. 16 and Dec. 1. The highest was 80 percent on Jan. 16, 2000.
PERSONAL FINANCES – Forty-six percent say their own finances are excellent or good; it was 44 percent last week. The best was 70 percent, last reached in January 2000. The worst was 42 percent three weeks ago and March 14, 1993.
BUYING CLIMATE – Twenty-four percent say it's an excellent or good time to buy things; it was 22 percent last week. The best was 57 percent on Jan. 16, 2000. The worst was 18 percent this Oct. 19, Aug. 10 and Aug. 24.
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 Dec. 21, 2008. 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.