By Jon Cohen
Washington Post Staff Writer
Tuesday, March 20, 2007 5:16 PM
Consumer confidence plunged this week, reversing its gains for the year amid rising gas prices, a volatile stock market and fresh signs of inflation.
In its biggest one-week drop in more than three years, The Washington Post-ABC News Consumer Comfort Index (CCI) is down seven points to -5 on its scale of -100 to +100. The index has fallen this precipitously in a week only three other times in the more than 20-year history of the poll.
Only a week ago, The Post-ABC CCI had edged up to +2, a five-year high, after starting the year at -5, exactly where it is today. Now, the gains for the year have been reversed under the cumulative weight of higher pump prices, uneasiness on Wall Street and indicators of inflationary pressures for both consumers and businesses.
Since late January, the national average price for a gallon of gasoline is up 41 cents, to $2.58, according to the Department of Energy. That is the highest level for gas prices in more than six months. And last week, the Department of Labor reported that consumer prices in February rose faster than Wall Street expectations, mirroring its latest data on wholesale prices.
With the downturn in economic indicators and higher fill-up costs, the percentage of all Americans saying the nation's economy is in "excellent" or "good" shape is down to 42 percent, the lowest it has been since October; last week it was 47 percent.
The CCI is based on the public's assessments of the national economy, their personal finances and the general buying climate. Overall, 39 percent call it a good time to buy things and 61 percent say their personal finances are in good shape.
Since last week, the overall index is down especially sharply in the Northeast and among young adults, aged 18 to 34. Confidence among Republicans is also down to its lowest level since last August, but at +23 on the CCI they remain far more confident than independents (-8) or Democrats (-23).
At -5, the CCI is a bit better than its long-term average, -9, in polls since late 1985.