Confidence Returns to 2007 Low, Spurred by Weak Buying Climate
April 24, 2007 — -- Consumer confidence returned to its 2007 low this week, with gasoline prices high and ratings of the buying climate at their lowest since October.
The ABC News/Washington Post Consumer Comfort Index stands at -7 on its scale of +100 to -100, matching its 2007 low for the second time in three weeks. It's fallen nine points from a 2007 high of +2 in mid March, in tandem with rising gas prices.
The CCI is calculated according to Americans' ratings of the national economy, the buying climate and their personal finances. Ratings of the buying climate lead the decline: Just 36 percent now rate it positively, down seven points in the last month.
High gas prices are likely the main culprit. After 11 weeks on the rise, gas now averages $2.87 a gallon in federal survey data, 20 cents from its record high in September 2005. Consumer confidence has historically been sensitive to rising fuel prices.
Things could be worse; while ratings of the buying climate have softened, incomes (given continued low unemployment) are pulling in a positive direction. Sixty-one percent rate their personal finances positively, up four points in the last two weeks.
In the CCI's remaining component, 43 percent rate the national economy positively, unchanged in the past month.
TREND -- Given competing positive and negative economic forces, confidence has wobbled the past two months, but with a generally downward trend. The CCI started March at -1, hit its yearly high of +2 the next week, only to be followed by a record-matching seven-point drop March 18.
It's averaged -3 so far this year, better than its average in weekly polls since December 1985, which is -9. Its record low was -50 in February 1992; its all-time high, +38 in January 2000.
GROUPS -- As usual, the index is higher in better-off groups; for example it's +48 among top-income Americans, while -49 among those with the lowest incomes and +4 among college graduates, while -15 among those who haven't finished high school.
The index also remains much stronger among Republicans (+38) than among independents (-15) or particularly among Democrats (-33). The current 71-point partisan gap is the largest since September 2006.
Here's a closer look at the three components of the ABC/Post CCI:
NATIONAL ECONOMY -- Forty-three percent of Americans rate the economy as excellent or good; 44 percent rated it so last week. The highest was 80 percent on Jan. 16, 2000. The lowest was 7 percent in late 1991 and early 1992.
PERSONAL FINANCES -- Sixty-one percent say their own finances are excellent or good; 60 percent rated it so last week. The highest 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 say it's an excellent or good time to buy things; 39 percent said that last week. The highest was 57 percent on 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 April 22, 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.