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Consumer Sentiment: Struggling Forward

Photo Courtesy - Getty Images(NEW YORK) -- Consumer views of current economic conditions resumed their struggle forward this week, with the weekly Consumer Comfort Index inching back near the high end of its recent range.

The index stands at -41 on its scale of -100 to +100, far below its 25-year average, -14, and indeed still below -40, where it’s been mired for a record 146 weeks. But, despite ups and downs, there are several indications of gradual advance:

    * The CCI was below -41 for all of 2009 and reached -41 just three times in 2010 -- but it’s already matched or exceeded this level twice in just the first month of 2011.

    * While the index averaged -48 in 2009 (its lowest on record), it advanced slightly to -46 in 2010, and so far this year has averaged -43 -- small progress, but progress nonetheless.

    * Since hitting its record low, -54, in December 2008, the CCI has correlated with the passage of time at a robust .61; as the weeks have passed, it’s slowly gained.

    * Last month’s economic expectations measure -- maintained separately from the current-sentiment CCI -- was its least pessimistic in more than eight years.

    * The index correlates with the Dow Jones Industrial Average at a remarkable .83 (after detrending for time) -- and the Dow Tuesday closed above 12,000 for the first time since June 2008.

The CCI, produced by Langer Research Associates, is based on Americans’ ratings of their personal finances, the buying climate and the national economy. Forty-six percent now rate their finances positively, matching its average last year, and 28 percent call it a good time to buy things, a scant 2 points above its 2010 average. While just 14 percent rate the national economy positively, that’s 4 points better than its 2010 average, and has been in double digits for 12 weeks straight, matching the longest run in double digits (set last spring) since fall 2008.

Even with the general upward trend, there could be a long road ahead. After the last major recession in 1991-92, it took the CCI more three and a half years to reach its pre-recession levels. Now, given how low it’s been and how slowly it’s advancing, it would take the CCI 10 years at this pace to regain its current long-term average.

Copyright 2011 ABC News Radio 

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