Buying Climate Ratings Pull Confidence Back

Consumer confidence failed this week to extend its recent gains, slipping back to its mid-July level amid weaker ratings of the buying climate.

The ABC News/Washington Post Consumer Comfort Index stands at -11 on its scale of +100 to -100, down four points from last week, when it matched its high of the year. It's back to where it was July 10, and nearly back to its average this year, -12.

The index is based on Americans' ratings of the economy, their personal finances and the buying climate. It's the latter -- which in the past has been sensitive to gasoline prices -- that's taken a hit. Just 33 percent now call it a good time to buy things, down four points from last week and six points from early July.

Gas now averages $2.29 a gallon, according to the weekly U.S. Energy Department survey. It peaked, in nominal terms, at $2.33 on July 11.

Other measures have been steadier. Forty-one percent say the economy's in good shape, and 59 percent say their own finances are OK, about what they were last week. Both these are very near their long-term average in weekly polls since late 1985; but ratings of the buying climate are six points below average.

TREND -- At -11, the index is four points off its best of the year, reached on March 6 and, as noted, again last week. Still, it's holding eight points above its worst of the year, -19 on May 1. It's been far better, peaking at an all-time high of +38 in January 2000; but also far worse, a low of -50 in February 1992. The index's long-term average is -9.

GROUPS -- Confidence as usual is stronger in better-off groups. The index is +40 among higher-income Americans while -45 among those with the lowest incomes, +6 among college graduates while -32 among those who haven't finished high school, -7 among whites but -25 among blacks and +2 among men while -22 among women.

Confidence took the biggest hit this week among Northeasterners and Midwesterners, where the index is down from last week by nine and 11 points, respectively. It's also down by 10 points among Republicans (to +24) in the last week, while steady among Democrats (-40) and independents (-13).

Here's a closer look at the three components of the ABC/Post CCI:

NATIONAL ECONOMY -- Forty-one percent of Americans rate the economy as excellent or good; it was 42 percent last week. The highest was 80 percent on Jan. 16, 2000. The lowest was seven percent in late 1991 and early 1992.

PERSONAL FINANCES -- Fifty-nine percent say their own finances are excellent or good; it was 60 percent last week. The best was 70 percent on Aug. 30, 1998, matched in January 2000. The worst was 42 percent on March 14, 1993

BUYING CLIMATE -- Thirty-three percent say it's an excellent or good time to buy things; it was 37 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 July 31, 2005. The results have a three-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.

The Washington Post replaced Money magazine as cosponsor of this index at the start of this year. The survey methodology remains the same.

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