Last evening, ABC News and Money Magazine released the results of their latest consumer opinion survey. The full text of the survey report can be found right here on AOL. Go to keyword ABC then click on ABC News.

According to the report, consumers started 1996 with a more negative view of their personal economic situation than they had in 1995. The ABC News/Money Consumer Comfort Index for the month ending January 7 had a reading of -17 versus an average reading of -15 for 1995. The Comfort Index is a composite index constructed from the results of separate survey questions related to the National Economy, Personal Finances, and the consumer Buying Climate.

For the month ending January 7, only 34% of the 1,038 people interviewed rated the national economy positively. 55% rated their personal financial situation as positive, and 35% felt that this was a good time to buy things. The relative significance of these readings becomes a bit clearer when they are compared with the best, worst, and average readings during the nine years the survey has been conducted. The table below provides some insight into this. For ease of comparison, all of the figures in the table have been presented in terms of the percentage of people responding positively to the survey questions. The percentage of negative responses is obtained by subtracting the positive response from 100.

                      Best    Worst     Average    1/7/96                 

National Economy      +50%     +7%       +30%       +34%
Personal Finances     +62%     +42%      +54%       +55%
Buying Climate        +52%     +20%      +34%       +35%

The information revealed by this table is pretty sobering. To begin with, at no time since 1986, have more than half of the survey respondents regarded the national economic situation as positive. Consumer buying intentions were not much better. At best, only little more than half of the respondents felt positive about making purchases. Feelings about personal finances generally ranked more positively than the other two categories. At worst, 42% of the respondents still rated their personal finances positively. Still, at best, only 62 people out of 100 felt positive about their personal financial situation.

Although current negative ratings of the economy are almost 2 to 1 over positive ratings, today's figure of 34% positive is still four points higher than the 30% average rating over the past 9 years. Current ratings on personal finances and the buying climate are both one point greater than the 9-year average.

The previously-mentioned Consumer Comfort Index is obtained by adding together the positive and negative reponses for the three survey catagories and dividing by three. For example, the Comfort Index for 1/7/96 would be (34-66+55-45+35-65)/3 = -17.33 which, rounded off, is -17.

The possible values for the Index range from -100 to +100.

Summing up: With two-thirds of the respondents feeling negative about the economy and two-thirds feeling negative about initiating new purchases, its no wonder that retailers just experienced the lowest year-to-year Christmas-season sales gain in 10 years.

Byline: Lafferty (MF Merlin)