Consumer Confidence Advances Again

Consumer confidence advanced this week to its best level in nearly three months, regaining its long-term average and moving very near its best of the year.

The ABC News/Washington Post Consumer Comfort Index has gained a healthy 10 points since dropping to an 11-month low six weeks ago as gasoline prices peaked. It stands now at -9 on its scale of +100 to -100, up from -19 on May 1.

The index was last this high on March 20; its best of the year was -7 on March 6. Its current level matches its long-term average, -9, in weekly polls since December 1985.

The improvement has come mainly in more economically sensitive groups -- among senior citizens, minorities and people with household income under $50,000 a year. People with less money are harder hit by rising prices for basic needs such as fuel.

Gasoline prices peaked at an average $2.28 per gallon April 11, then eased to $2.10 on May 30 before rising slightly in the last two weeks, to $2.13 in the latest weekly U.S. Department of Energy survey.

The index also has improved somewhat more among men (up 13 points since May 1) than women (up eight). Its gains this week are best in the Northeast, and in the last six weeks have been best in the Northeast and the South. Confidence is softest in the Midwest.

INDEX -- The index is based on Americans' ratings of the national economy, the buying climate and their personal finances. This week, 39 percent rate the economy positively, up from 33 percent on May 1. As many call it a good time to buy things, also compared with 33 percent six weeks ago. Most, 59 percent, say their own finances are in good shape, it was 55 percent at the recent low on May 1.

TREND -- The index started the year at -9, peaked at -7, but then headed south, dropping to -17 in early April under the weight of spiking gas prices and a sluggish job market. As noted, it bottomed out at -19 in early May. It has rebounded steadily since May 15, highlighted by one-week gains of three points on May 22 and again this week.

The index peaked at +38 in January 2000 and bottomed out at -50 in February 1992.

GROUPS -- As usual, the CCI is higher in better-off groups. It's +23 among upper-income Americans while -49 among those with the lowest incomes, +7 among college graduates while -45 among those who haven't finished high school, -4 among whites but -37 among blacks and 0 among men while -15 among women.

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

NATIONAL ECONOMY -- Thirty-nine percent of Americans rate the economy as excellent or good; it was 37 percent last week. The highest was 80 percent on Jan. 16, 2000. The lowest was 7 percent in late 1991 and early 1992.

PERSONAL FINANCES -- Fifty-nine percent say their own finances are excellent or good, unchanged from 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-nine percent say it's an excellent or good time to buy things; it was 36 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 June 12, 2005. The results have a three-point error margin. Field work was done 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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