Confidence Holds for Now Amid Higher Gas Prices
July 11, 2006— -- Consumer confidence held essentially steady this week, despite weak job growth and the highest prices at the pump since the aftermath of Hurricane Katrina. How long it holds is another question.
The ABC News/Washington Post Consumer Comfort Index stands at -10 on its scale of +100 to -100, up from -19 May 21. The index has hovered around its long-term average of -9 for the past three weeks, after sharp gains in June. This week's result, though, does indicate a slight dip in ratings of the buying climate, down three points.
The index recovered as gas prices stabilized earlier this summer. But gas has now gained 10 cents in the last two weeks to $2.97 a gallon, the second-highest nominal price on record. Further price hikes could well take a toll: Confidence has declined, often sharply, in the face of previous gas price spikes, for example in the spring of 2005 (gas up 24 cents, index down 12 points), late summer 2005 (gas up 24 cents, index down 16) and this past spring (gas up 11 cents but up 34 cents in the previous 10 weeks; index down 12).
The four-week change in the price of gasoline has correlated significantly with the change in the index over time, and particularly in the past year.
Separately, job growth in June (121,000) fell short of economists' estimates.
INDEX -- The weekly ABC/Post index comes from Americans' ratings of the national economy, the buying climate and their personal finances. Forty percent now rate the economy positively, 36 percent say it's a good time to buy things and 59 percent say their finances are in good shape, each rating at or very near its average in weekly polls since late 1985.
TREND -- At -10, the CCI falls between the year's average of -12 and the long-term average of -9. It peaked twice this year at -7, most recently in April, then fell sharply to a 2006-low of -19 on May 21 before advancing. The index hit its all-time high of +38 in January 2000 and fell to its all-time low of -50 in February 1992.
GROUPS -- As usual, the index is higher in better-off groups. It's +29 among higher-income Americans while -47 among those with the lowest incomes; +2 among college graduates while -35 among those who haven't finished high school; -5 among whites but -35 among blacks and -3 among men while -17 among women.
Regionally, the CCI ranges from -3 in the West to -8 in the Midwest, -9 in the Northeast and -17 in the South. It remains far higher among Republicans (+28) than among Independents (-19) or, particularly, Democrats (-30).
Here's a closer look at the three components of the ABC/Post CCI:
NATIONAL ECONOMY -- Forty percent of Americans rate the economy as excellent or good; 39 percent rated it so last week. The highest percentage of Americans rating the economy excellent or good was 80 percent on Jan. 16, 2000. The lowest was 7 percent in late 1991 and early 1992.
PERSONAL FINANCES -- Fifty-nine percent say their own finances are excellent or good, unchanged from last week. The highest percentage saying their finances were excellent or good was 70 percent on Aug. 30, 1998, matched in January 2000. The lowest was 42 percent on March 14, 1993.
BUYING CLIMATE -- Thirty-six percent say it's an excellent or good time to buy things; it was 39 percent last week. The highest percentage was 57 percent on Jan. 16, 2000. The lowest was 20 percent in the fall of 1990.
METHODOLOGY -- Interviews for the ABC News/Washington Post 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 9, 2006. The results carry a three-point error margin. Field work was done 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.