Postwar Boost Ends as Consumer Confidence Falls Sharply
By Dalia Sussman
abcnews.go.com
N E W Y O R K, April 30 — A month-long surge in consumer confidence ended with a sharp snap this week, putting a quick and unceremonious end to hopes of a sustained rally. But it shouldn't be a surprise: Confidence followed almost exactly the same course after the 1991 Gulf War.
Giving up a third of its postwar gains, the ABCNEWS/Money magazine Consumer Comfort Index fell a steep four points this week to -19 on its scale of +100 to -100. Propelled by the war in Iraq, the index had jumped a remarkable 13 points in four weeks, last week reaching its best level in seven months.
The index's performance is very similar to its track in 1991. It rose 10 points in the five weeks following the war's successful end, then faltered, losing three points in one week after its peak and six points over the next month. The index continued down gradually, bottoming out at a record low -50 in early 1992.
Confidence is much better than it was at this time in 1991, with an index of -19 now compared to -31 then. But confidence is sharply down from its peak (+38 in January 2000) and 10 points below its average since this weekly survey began in December 1985.
This survey is based on a four-week rolling average of 250 random telephone interviews per week. The most recent interviews were completed two days ago.
INDEX — The ABC/Money index is made up of ratings of the economy, personal finances and the buying climate. While Americans' ratings of their own finances are the strongest of the three — 56 percent positive, about equal to the 17-year average — they've lost four points since last week to help push down this week's index.
Far fewer say now's a good time to buy things, 36 percent, three points below average; or rate the national economy positively, 29 percent, which is 12 points fewer than average.
TREND — The ABC/Money index has averaged -23 so far this year, compared to an average of -11 last year (its worst since 1996) and a lifetime average of -9. Its best year overall was an average +29 in 2000; its worst, an average -44 in 1992.
GROUPS — As usual, confidence is higher among better-off Americans. The index is +6 among people in higher-income households compared to -52 in the lowest, -6 among college graduates while -40 among high-school dropouts, -13 among whites but -48 among blacks and -12 among men while -25 among women.
The index is a good deal lower in the Northeast (-28) than in other regions. And it peaks among Republicans at +9, compared to -26 among independents and -37 among Democrats.
Here's a closer look at the three components of the ABCNEWS/ Money index:
NATIONAL ECONOMY — Twenty-nine percent of Americans rate the nation's economy as excellent or good; it was 30 percent last week. The best was 80 on percent Jan. 16, 2000. The worst was 7 percent in late 1991 and early 1992.
PERSONAL FINANCES — Fifty-six percent rate their own finances as excellent or good; it was 60 percent last week. The best was 70 percent, set Aug. 30, 1998, and last matched in January 2000. The worst was 42 percent on March 14, 1993.
BUYING CLIMATE — Thirty-six percent say it's an excellent or good time to buy things they want and need; it was 37 percent last week. The best was 57 percent on Jan. 16, 2000. The worst was 20 percent in the autumn of 1990.
METHODOLOGY — The ABCNEWS/Money magazine Consumer Comfort Index represents a rolling average based on telephone interviews with a random sample of about 1,000 adults nationwide each month. This week's results are based on 1,003 interviews in the month ending April 27 and have an error margin of plus or minus 3 percentage points. Field work was conducted by ICR-International Communications Research of Media, Pa.
The ABCNEWS/Money index is derived as follows: The negative response to each index question is subtracted from the positive response to that question. The three resulting numbers are then 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. |
