POLL: Current Sentiment Up, Expectations Still Lag
Confidence advanced sharply, but expectations for economy remained shaky.
Dec. 18, 2007 — -- Consumer confidence advanced sharply this week, buoyed by more positive ratings of personal finances even as expectations for the economy's direction remained on shaky ground.
The ABC News/Washington Post Consumer Comfort Index gained 6 points to -17 on its scale of +100 to -100; it's increased this much or more in a single week only eight times in the past 22 years. The CCI had declined for four straight weeks, then paused last week before this week's sharp advance.
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Despite the spike, a separate monthly measure of economic expectations remains grim. Last month, 68 percent said the economy was getting worse, the most in 17 years. That's now backed down to 61 percent, but it's still unusually high.
While ratings of the buying climate remain soft, shoppers might be encouraged by discounting by anxious retailers this holiday season. Unemployment has stayed low, with the country adding 1.3 million jobs in the past year. And after a run-up this fall, gas prices have leveled in the last few weeks.
At the same time, in addition to expectations, other views remain troubled. In an ABC/Post poll last week, the economy overtook Iraq as the most-cited issue in the upcoming presidential election. Retailers report lackluster sales. And the Federal Reserve's quarter-point cut in interest rates fueled a rough week for the stock market.
INDEX – The CCI is based on Americans' ratings of their current finances, the national economy and the buying climate. Positive ratings of personal finances are up 5 points to 59 percent this week, a level last seen in mid-October, matching the 2007 average.
The other two measures remain lower: Thirty-three percent rate the national economy positively, still 6 points off its 2007 average. Thirty-two percent call it a good time to buy things, just 2 points from its low this year, two weeks ago.
EXPECTATIONS – As noted, economic pessimism remains in the doldrums. The 61 percent who say the economy is getting worse compares with an average of 39 percent in ABC/Post polls since 1981. Only 8 percent say things are improving.
TREND – This week's 6-point gain in the CCI punctuates a year of big changes. In July, the index increased 6 points in a week as well, followed by a 9-point one-week drop in August. These changes mark some of the largest weekly fluctuations in the CCI's history.
At -17, the CCI is now 7 points above its 4 and a half year low of -24 two weeks ago, and back to its mid-November level.
Overall, confidence has moved in a downward arc since the beginning of the year. The index averaged -2 in the first quarter of the year but has struggled since – averaging -9 in the second quarter (including a 12-point drop in May to June), -12 in the third quarter and -18 since October.
On average for the year the CCI is just 1 point below its all-time average, -9. While far below its record high, +38 in January 2000, it's also much better than its record low, -50 in February 1992.
GROUPS – As usual the CCI is higher in better-off groups. It's +7 among higher-income people while -34 among those with the lowest incomes, -6 among those who've been to college while -40 among high-school dropouts, -17 among whites but -20 among blacks and -7 among men while -26 among women.
Partisan differences are their largest since mid-September: The index is +23 among Republicans, but -21 among independents and -44 among Democrats.
Here's a closer look at the three components of the ABC/Post CCI:
NATIONAL ECONOMY – Thirty-three percent of Americans rate the economy as excellent or good; it was 30 percent last week. The highest was 80 percent 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; it was 54 percent last week. The highest was 70 percent last reached in January 2000. The lowest was 42 percent March 14, 1993.
BUYING CLIMATE – Thirty-two percent say it's an excellent or good time to buy things; it was 31 percent 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 Dec. 16, 2007. The results have a three-point error margin. The expectations question was asked of 500 respondents Dec. 2 - 16, 2007; that result has a 4.5-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.