Confidence Holds Despite $3 Gas
July 25, 2006— -- Consumer confidence held essentially steady this week, despite $3 gas prices, which raises the possibility that the public has developed a thicker skin when it comes to gas-price spikes.
The ABC News/Washington Post Consumer Comfort Index stands at -11 on its scale of +100 to -100, matching its average for the year and not far off its long-term average, -9, in weekly polls since December 1985. It's hovered from -9 to -11 in the past five weeks, while gasoline has climbed 13 cents to reach $3 a gallon, its highest since Hurricane Katrina hit.
But the danger's hardly over: Gas prices correlate historically with consumer sentiment, and sometimes the reaction is somewhat delayed. But a separate ABC News poll this week also suggests that Americans are learning to live with high gasoline prices: Just 15 percent plan to cut back on their driving in the weeks ahead, down from 50 percent after the Katrina gas shock in September 2005 and 30 percent when prices jumped this spring.
That poll also found that people are mainly spending less on other things (39 percent), saving less (20 percent) or increasing credit-card or other debt (10 percent) to pay for gasoline. When asked what price for gas would make them significantly reduce their driving -- no mean feat in a car-based society -- the average answer was $4.16.
INDEX -- The weekly CCI is calculated according to Americans' ratings of the current national economy, the buying climate and their personal finances. This week, 38 percent said the economy was in good shape and 35 percent called it a good time to buy things; as usual, far more -- 60 percent -- rate their finances positively. Each category is near its long-term and 2006 average.
TREND -- The index peaked at -7 twice this year before dropping to a low of -19 in May. Those compare with an all-time high of +38 in January 2000 and a record low of -50 in February 1992.
GROUPS -- As usual, the index is higher in better-off groups. It's +27 among higher-income Americans while -58 among those with the lowest incomes; +4 among college graduates while -46 among those who haven't finished high school; -7 among whites but -40 among blacks; and +2 among men while -22 among women.
Regionally, the index is best in the West, at +2, compared with -3 in the Northeast, -15 in the South and -22 in the Midwest. A strong political element continues: The index is +25 among Republicans but -19 among Independents and -30 among Democrats.
Here's a closer look at the three components of the ABC/Post CCI:
NATIONAL ECONOMY -- Thirty-eight percent of Americans rate the economy as excellent or good; it was 39 percent 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 percent say their own finances are excellent or good; 61 percent said 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-five percent say it's an excellent or good time to buy things; it was 36 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 come from telephone interviews among a random national sample of 1,000 adults in the four weeks that ended July 23, 2006. The results have 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.