Confidence Holds Steady; Pessimism Remains High
June 19, 2007 — -- The precipitous decline of consumer confidence in May and June has flattened, with the ABC News/Washington Post Consumer Comfort Index essentially unchanged again this week. But it remains near its 2007 low, with pessimism running high.
The CCI fell by 12 points in the month through June 3 as gas prices soared; it's now leveled as gas has eased back, from a high of an average $3.22 to $3.01 in this week's U.S. Department of Energy survey. Gas prices are correlating highly with economic sentiment.
The ABC/Post index stands at -14 on its scale of +100 to -100, one point from the 2007 low two weeks ago. In a separate measurement of expectations, 52 percent say the economy is getting worse -- about the same as last month, and much higher than the level of pessimism before the run-up in gas prices this spring.
INDEX -- The CCI is based on Americans' ratings of the current economy, the buying climate and their personal finances. Ratings of personal finances are 57 percent positive for the third consecutive week, matching its low for the year and its long-term average since this poll began in late 1985.
Thirty-eight percent rate the national economy positively while 34 percent say the buying climate is good, both essentially unchanged this week.
EXPECTATIONS -- In terms of expectations, for the second month in a row -- and the only times since last fall -- a majority says the economy is getting worse. That's up six points from April and up 18 points from January.
As in May, economic pessimists outnumber optimists by 41 points, the largest gap since May 2006. Only 11 percent say the economy is getting better, the fewest since October 2005. Before May, economic pessimism last reached a majority in summer 2006, during another spike in gas prices.
Pessimism is now 13 points higher than its long-term average in polls since March 1981 and 18 points higher than its 2007 low.
TREND -- Overall it's been a tough spring for consumer confidence. The CCI is down 11 points from -3 six weeks ago, hovering near its 2007 low of -15 on June 3. It's nine points worse than its 2007 average, -5, and far from its 2007 high, +2 on March 11.
Still, the 2007 CCI is above its annual average last year (-10) and indeed any year since 2001 (+4).
GROUPS -- As usual, confidence is higher among better-off Americans. The index is +43 among higher-income people while -55 among those with the lowest incomes, +5 among those who've been to college while -33 among high-school dropouts and -10 among whites but -46 among blacks. It's -3 among men compared with -24 among women.
Big partisan differences remain: The CCI is +19 among Republicans, but -19 among independents and -32 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 was 80 percent on Jan. 16, 2000. The lowest was 7 percent in late 1991 and early 1992.
PERSONAL FINANCES -- Fifty-seven percent say their own finances are excellent or good; it was 57 percent last week. The best was 70 percent last reached in January 2000. The worst was 42 percent on March 14, 1993.
BUYING CLIMATE -- Thirty-four percent say it's an excellent or good time to buy things; it was 34 percent last week. The best was 57 percent on Jan. 16, 2000. The worst 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 June 17, 2007. The results have a three-point error margin. The expectations question was asked of 500 respondents June 6-17; that result has a 4.5-point margin of error. 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.