Consumer Comfort Index Reports Dramatic Decrease
Tuesday, August 21, 2007; 5:02 PM
Consumer comfort plummeted this week amid turbulence in the stock market and a seemingly infectious crisis in the home mortgage market.
The Washington Post-ABC News consumer comfort index (CCI), a barometer of the public's assessment of current economic conditions, plunged nine points this week, the biggest ever one-week drop since the poll started in late 1985.
The CCI now stands at -20 on its scale of --100 to +100, well off its high for the year, +2 in March, and near its post-Hurricane Katrina lows. After that storm devastated the Gulf Coast two years ago, consumer confidence quickly dropped by 11 points before recovering several months later.
The current fall has been even more precipitous. A month ago, easing gasoline prices helped lift the index to -5, 15 points higher than it is this week.
Although pump prices remain below the highs reached earlier this year, the stock market's recent ups and downs likely have rattled some nerves. In an April Gallup poll, about two-thirds of Americans said they have money invested in securities. The volatility's close link to the cooling housing market personalizes the crisis.
The AP reported today that the national foreclosure rate has nearly doubled over the past year. The CCI among homeowners is now lower than it has been at any point since November 2005.
The CCI combines Americans' ratings of the national economy, their personal finances and the general buying climate. In another rarity, all three of the index's components are down this week.
Only 32 percent rate the nation's economy positively, down from 37 percent last week and 44 percent a month ago. More, 53 percent, say their personal finances are in "excellent" or "good" shape, but that is the fewest to say so since October 2004.
Ratings of the buying climate are off this week, but remain better than they were during the latest gas price spike. (This measure runs the most closely to gasoline prices.) Overall, 35 percent say it is an excellent or good time to buy the things they need; 39 percent said so last week.
The CCI's largest previous one-week decline was seven points. . The index has fallen that much three times, the last time in February 2004.
The Post-ABC index is a rolling average based on telephone interviews with 1,000 randomly selected adults nationwide conducted over a four-week period that ended Aug. 19. The results have a margin of sampling error of plus or minus three percentage points.