Most Still Pessimistic About Direction of Economy
July 18, 2006— -- The latest spike in gas prices hasn't yet hurt consumer confidence, but the picture is hardly rosy: For the third month in a row, most Americans believe the economy is getting worse.
Fifty-two percent in the latest ABC News/Washington Post survey of consumer attitudes said the economy is deteriorating, about the same as said so last month, up from 39 percent who said so in January. Just 14 percent said the economy is improving.
Separately, the ABC/Post Consumer Comfort Index, which measures views of current economic conditions, stands at -9 on its scale of +100 to -100, matching its long-term average in 20 years of weekly polls. It has held fairly steady the past month, despite gas prices that jumped to a national average of $2.99 a gallon this week, just 8 cents away from the nominal record set after Hurricane Katrina hit last year.
How long it holds is an open question: Consumer confidence has historically been sensitive to gasoline prices, and especially so in the past year.
EXPECTATIONS -- Economic expectations have been negative for a long while; optimists last outnumbered pessimists in January 2004. Though better now than in September 2005 -- 60 percent expressed pessimism after Katrina -- pessimism this month is well above its 25-year average of 39 percent.
There's so much room for debate about the economy that partisanship informs the assessment. Sixty-six percent of Democrats and 52 percent of Independents said the economy is getting worse. Just 31 percent of Republicans agree.
Pessimism levels also vary by region, from a high of 59 percent in the South to a low of 45 percent in the West.
INDEX -- The weekly CCI is calculated according to Americans' ratings of the current national economy, the buying climate and their personal finances. This week 61 percent rate their finances positively, four points above the long-term average. Ratings of the economy and buying climate, 39 and 36 percent respectively, remain near their 2006 and 20-year averages.
TREND -- The index has ranged as high as -7 and as low as -19 this year. As noted, today's -9 is at its average since this weekly poll began in December 1985, and near this year's average, -11. The index's all-time high was +38 in January 2000; its all-time low, -50 in February 1992.
GROUPS -- As usual, the index is higher in better-off groups. It's +28 among higher-income Americans while
-53 among those with the lowest incomes; +5 among college graduates while -41 among those who haven't finished high school; -5 among whites but -33 among blacks; and +2 among men while -20 among women.
Regionally, the index continues to be stronger in the West, at +4, compared with -7 in the Midwest, -10 in the Northeast and -19 in the South. And as with expectations, there's a strong political element in the current economic sentiment: The index is far higher among Republicans (+27) than among Independents
(-18) or, particularly, Democrats (-28).
Here's a closer look at the three components of the ABC/Post CCI:
NATIONAL ECONOMY -- Thirty-nine percent of Americans rate the economy as excellent or good; 40 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.
PERSONAL FINANCES -- Sixty-one percent said their own finances are excellent or good; 59 percent rated them so last week. The highest percentage who said 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 said it's an excellent or good time to buy things, unchanged from 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 come from telephone interviews among a random national sample of 1,000 adults in the four weeks that ended July 16, 2006. The results have a three-point error margin. The expectations question was asked of 500 respondents July 5-16; that result has a 4.5-point margin of error. 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.