Financial Crisis Sours Consumers; Record Say Economy's Getting Worse
Confidence three points from historic low, 82 percent say economy is worsening.
Oct. 14, 2008— -- Weeks of turmoil have pushed Americans to their grimmest economic outlook in 27 years of polling, with consumer confidence dropping within 3 points of its historic low.
The ABC News Consumer Confidence Index fell 5 points this week to -48 on its scale of +100 to -100. In a separate measure, a record high 82 percent say the economy is getting worse, an increase of 30 points from last month – the biggest month-to-month jump ever.
Click here for PDF with charts and data table.
The CCI, measured in a four-week-average, dropped sharply after weeks of financial upheaval, with the stock market plunging 18 percent and Congress pushing through a $700 billion package for Wall Street. The Dow Jones average rebounded yesterday, gaining 936 points (11 percent), the largest one-day point gain in history.
Market fluctuations typically have had little direct relationship to consumer confidence; just over four in 10 Americans don't own stocks or stock funds; those who do are almost exclusively long-term, buy-and-hold investors, and many have resources to carry through a bear market. In a separate ABC News/Washington Post poll, half of stock owners said they've been hurt financially by the market's drop; fewer, 20 percent, say they've been hurt a great deal.
EXPECTATIONS – More broadly, though, the economic outlook has never been grimmer. As noted, a record 82 percent say the economy's worsening, the most in ABC News polls dating to March 1981. Just 2 percent are optimistic, matching the low set in July; 13 percent say it's staying the same – which for nearly everyone is not good.
INDEX – The CCI, which does not include expectations, is based on Americans' ratings of their current finances, the national economy and the buying climate. Just 9 percent rate the economy positively, the lowest since November 1992, 2 points from the all-time low set in late 1991 and early 1992 and down 5 points in the past week. It's down 22 points this year and 30 points off the long-term average in weekly CCI polls since late 1985.
Nineteen percent say it's a good time to buy things, down 12 points from the beginning of the year. Ratings of personal finances – usually the strongest of the three measures – stand at 50 percent positive for the second week in a row.
TREND – Confidence has had a dreadful year. The CCI started 2008 at -20, hit its record low -51 in May, climbed back to -41 in July but hasn't gone higher. It's averaging -40 this year, putting it on track for the second worst on record, after -44 in 1992.
The index's long-term average is -10; its best year, +29 in 2000; its best week, +38 in January 2000.
GROUPS – The index is higher as usual in better-off groups, but remains negative across the board for the 16th straight week. It's -6 among people with the highest incomes compared with -81 among those with the lowest, -41 among college graduates vs. -69 among high-school dropouts, -68 among blacks vs. -43 among whites, -63 among renters vs. -43 among homeowners and -40 among men and -55 among women.
Sharp partisan differences remain; the index ranges from -20 among Republicans to -47 among independents and -65 among Democrats, just 1 point off their lowest.
Here's a closer look at the three components of the ABC News CCI:
NATIONAL ECONOMY – Nine percent of Americans rate the economy as excellent or good; it was 14 percent last week. The highest was 80 percent on Jan. 16, 2000. The lowest was 7 percent in late 1991 and early 1992.
PERSONAL FINANCES – Fifty percent say their own finances are excellent or good; it was 50 percent last week. The best was 70 percent, last reached in January 2000. The worst was 42 percent on March 14, 1993.
BUYING CLIMATE – Nineteen percent say it's an excellent or good time to buy things; it was 21 percent last week. The best was 57 percent on Jan. 16, 2000.
METHODOLOGY: Interviews for the ABC News 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 Oct. 13, 2008. The results have a 3-point error margin. The expectations question was asked of 500 respondents Oct. 1-13, 2008; 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.