POLL: Drop in Consumer Confidence Now Its Second-Steepest on Record
Fall in confidence is surpassed only during the 1990-91 recession.
Feb. 12, 2008 — -- Consumer confidence fell again this week, making its second-steepest drop on record in the 22-year weekly ABC News index -- a drop surpassed only during the 1990-91 recession.
Down 4 points this week, 6 points last week and a net 17 points this year, the Consumer Comfort Index now stands at -37 on its scale of +100 to -100, its lowest since November 1993. It's fallen this far this fast once before, in October 1990, as the 1990-91 recession gathered steam.
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Confidence has been falling in lockstep with other negative economic news. A downturn in the service sector of the economy for the first time since 2003 sent stocks reeling last week, while the credit and housing crises continue apace. In a danger sign, this week less than half of Americans rate their own finances positively, a first since 1993.
The CCI has fallen by a significant margin in four out of the last five weeks, a sustained drop that also has been matched just once previously, when it fell significantly for four weeks straight in September to October 1990.
Last week's 6-point drop was unusual; the index has lost 6 or more points in a single week just 11 times in 22 years of weekly surveys. And its drop recalls the index's 13-points decline in the month leading up to the 1990-91 recession, and its 14-point drop in the month leading up the recession in 2001.
INDEX – The index is based on Americans' ratings of their current finances, the national economy and the buying climate. This week 49 percent rate their personal finances positively, less than half for the first time since November 1993, down 9 points this year and 8 points off the long-term average.
Less, 26 percent, call this a good time to buy things, the same as last week at a level not previously seen since July 1993. Positive ratings of the buying climate are down 5 points since the start of the year and 12 points below the long-term average.
Fewer still, 20 percent, rate the national economy positively, down 11 points this year and down 7 points in the last two weeks. It's 20 points below its long-term average, 40 percent, and again hasn't been this low since November 1993.
TREND – The CCI's drop this year is its steepest since it tumbled 19 points in October 1990. It follows a downward 2007, averaging -2 in the first quarter, -9 in the second, -12 in the third and -18 in the fourth.
Six weeks into 2008, the index's average for the year so far is -27, well below its 2007 average, -11, and its long-term, 22-year average of -10. While far below its record high, +38 in January 2000, the index also is better than its record low, -50 in February 1992.
GROUPS – The CCI is higher in better-off groups, but this week it slid to -5 among people in households with $100,000-plus incomes, entering the negative range for the first time in three years of tracking for that income group.
It continues to vary sharply by economic standing. The index is -59 among those with the lowest incomes, -25 among those who've been to college while -46 among high-school dropouts, -35 among whites but -46 among blacks and -30 among men while -43 among women.
And partisan differences remain; the index is -8 among Republicans, compared with -41 among independents and -50 among Democrats.
Here's a closer look at the three components of the ABC News CCI:
NATIONAL ECONOMY – Twenty percent of Americans rate the economy as excellent or good; it was 22 percent last week. The highest was 80 percent Jan. 16, 2000. The lowest was 7 percent in late 1991 and early 1992.
PERSONAL FINANCES – Forty-nine percent say their own finances are excellent or good; it was 52 percent last week. The best was 70 percent last reached in January 2000. The lowest was 42 percent March 14, 1993.
BUYING CLIMATE – Twenty-six percent say it's an excellent or good time to buy things; 26 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 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 Feb. 11, 2008. The results have a 3-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.