POLL: Positive Personal Finances Boost Confidence
Consumer confidence improved after the Fed's surprise half-point rate cut.
Sept. 25, 2007 — -- Consumer confidence improved this week, moving back near its long-term average a week after the Fed's surprise half-point cut in the federal funds rate. Improved ratings of personal finances led the way.
The ABC News/Washington Post Consumer Comfort Index advanced four points to -11 on its scale of +100 to -100. The index had fallen a record nine points in a single week last month; it's gradually recovered all that ground in the five weeks since.
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The jump in confidence was fueled by improving views of personal finances: Sixty-one percent say theirs are in good shape, up seven points in the last two weeks -- matching the largest two-week increase in this measure in the CCI's 21-year history.
The federal funds rate cut by the Fed last week is the benchmark rate for many credit cards and home-equity loans and can be reflected in rates on other consumer loans as well. Wall Street rallied after the Fed eased the rate.
INDEX -- The ABC/Post index is based on Americans' ratings of the national economy, personal finances and the buying climate. Ratings of personal finances customarily are the strongest of the three, and, as noted, they've risen by seven points in two weeks just once previously, in April 1993. (They've risen four points in one week, as they did this week, nine times previously.)
Of the other ratings, this week 36 percent rate the economy positively and 37 percent call it a good time to buy things, each little changed in the past two weeks.
TREND -- At -11, the CCI is near both its 2007 average (-8) and its average since the start of this weekly survey in late 1985 (-9). While better than its recent -20, it's still 13 points off of its 2007 high, +2 on March 11.
The index peaked at +38 in January 2000 and bottomed at -50 in February 1992.
GROUPS -- As usual the CCI is higher in better-off groups. It's +30 among higher-income people while -56 among those with the lowest incomes, +3 among those who've been to college while -35 among high-school dropouts, -5 among whites but -48 among blacks and -2 among men versus -19 among women.
Very sharp partisan differences remain: The index is +30 among Republicans, -21 among independents and -35 among Democrats.
Here's a closer look at the three components of the ABC/Post CCI:
NATIONAL ECONOMY -- Thirty-six percent of Americans rate the economy as excellent or good, the same as last week. The highest was 80 percent Jan. 16, 2000. The lowest was seven percent in late 1991 and early 1992.
PERSONAL FINANCES -- Sixty-one percent say their own finances are excellent or good; 57 percent said so last week. The highest was 70 percent last reached in January 2000. The lowest was 42 percent March 14, 1993.
BUYING CLIMATE -- Thirty-seven percent say it's an excellent or good time to buy things; 34 percent said so last week. The highest was 57 percent Jan. 16, 2000. The lowest was 20 percent in fall 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 Sept. 23, 2007. The results have a three-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.