Consumer Confidence Matches 2005 High

Consumer confidence matched its high of the year this week, reflecting the economic influences behind relatively upbeat recent assessments from the Fed and other sources.

The ABC News/Washington Post Consumer Comfort Index stands at -7 on its scale of +100 to -100, up four points in two weeks and now significantly higher than its average this year, -12. It's been better in only 10 scattered weeks since summer 2002, all last year.

Gasoline prices, while still painful, have eased by four cents per gallon from the nominal high they set two weeks ago. Inflation is tepid, unemployment its lowest in nearly four years, personal income has risen and interest rates, albeit rising, are relatively low, with 30-year mortgages at 5.7 percent, compared with an average of 9.4 percent since 1971.

At the Fed, "our baseline outlook for the U.S. economy is one of sustained economic growth and contained inflation pressures," Chairman Alan Greenspan testified before Congress last week.

INDEX -- The weekly ABC/Post index is based on Americans' ratings of the national economy, the buying climate and their personal finances. This week 37 percent call it a good time to buy things, 42 percent say the economy's in good shape and 60 percent say their own finances are OK. Ratings of the economy are the farthest above their 2005 average, four points.

TREND -- The index today matches the 2005 high it reached March 6, and it's 12 points better than its low for 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.

GROUPS -- Confidence as usual is stronger in better-off groups. The index is +45 among higher-income Americans while -50 among those with the lowest incomes, +10 among college graduates while -33 among those who haven't finished high school, -5 among whites but -27 among blacks and +9 among men while -23 among women.

There are still vast gaps among political groups – an index of +34 among Republicans, compared with -11 among independents and -41 among Democrats. Compared with its 2005 averages, confidence is better among Republicans and independents, but worse among Democrats.

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

NATIONAL ECONOMY -- Forty-two percent of Americans rate the economy as excellent or good; it was 41 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 -- Sixty percent say their own finances are excellent or good; it was 59 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-seven 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 July 24, 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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