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Tuesday
Jan042011

Consumer Comfort Index Rings in the Old -- But with Brighter Hopes Ahead

Photo Courtesy - Getty Images(NEW YORK) -- Consumer views of current economic conditions start 2011 about as poor as they were across troubled 2010 -- but with tantalizing signs of potential gains ahead.

First the bad part: The ongoing Consumer Comfort Index stands at -45 on its scale of -100 to +100, its second-worst start to a new year in 25 years of weekly polling. That’s four points higher than at the beginning of 2009, but four points lower than in the first week of 2010. The CCI averaged -46 last year, and this week marks the 142nd week in a row it hasn’t exceeded -40, a record by far.

Yet other trends offer grounds for hope. The Labor Department last week said weekly initial unemployment claims fell below 400,000 for the first time since July 2008 -- and historically the CCI has closely correlated with this indicator. Moreover, the Dow Jones Industrial Average jumped 93 points yesterday to its highest close since August 2008. The Dow and the CCI also are aligned closely, with a monthly correlation of .83.

There are more reasons to think better things may be in store. Expectations for the economy’s future, as apart from views of current conditions, improved last month. And as noted last week, 2010 was the first year since 2006 that the CCI improved upon its previous year’s annual average. That conjures images of its recovery from the last sharp downturn; after bottoming out at an annual average of -44 in 1992, the index improved to -37 in 1993 -- and then grew steadily until the next (milder) recession in 2001.

The CCI, produced by Langer Research Associates, is based on Americans’ ratings of their current finances, the national economy, and the buying climate. This week just 11 percent rate the national economy positively, 26 percent call it a good time to buy things and 46 percent say their personal finances are in good shape, fewer than a majority for a record 52nd week straight.

Copyright 2011 ABC News Radio

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