Consumers Lose Confidence

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Americans don't have a lot of faith in the current economy, and they expect it to get worse.

A recent ABC News/Money magazine survey revealed that the confidence of American consumers has been flagging lately. We're just not buying things with the same gusto we had a few months ago.

According to the report, "[The] Consumer Comfort Index now stands at -22 on its scale of +100 to -100, down four points from last week, down nine points in three weeks, and down 19 points since reaching its recent high of -3 in mid-January."

Among contributing factors suggested were the recent surge in gas prices, continued weakness on the job front, and a somewhat sluggish stock market.

Here are some specific findings of the survey:

• Some 29% of respondents say the economy is in good shape. This is down 15 points over the last two months and well south of the long-term average of 40%.
  
  
• 35% said that it's a good time to buy things. This is the lowest percentage since May.
  
  
• 53% reported that their personal finances were OK (though it's possible that many of these folks may be deluding themselves).
  
  
• Only 23% said that the economy is getting better, while 42% see things getting worse.
  
  
• The rich are more content -- and significantly so. Higher-income respondents rated a +8 on the index, while the lowest-income group scored a -68. College graduates scored -7, while high school dropouts were considerably less confident at -53.
  
  
• Republicans scored a +31 on the index, compared to -43 for Democrats and -31 for independents.

The report also noted that "At -22, the ABC/Money index is 13 points below its long-term average, -9. It inched above average at the start of the year before [a] Feb. 15 plunge. (The last two times the index fell so steeply, in 1990 and 2001, recessions followed.) The current rating is far from the record high, +38 in January 2000 and still well above its all-time low, -50 in February 1992."

These results carry several implications for interested Fools. For starters, prolonged low confidence among consumers can hurt the companies we invest in. Makers and sellers of big-ticket discretionary-purchase items such as cars and washing machines may suffer if consumers put off purchases until rosier times. Such firms might include Ford (NYSE: F), Whirlpool (NYSE: WHR), and cruise specialist Royal Caribbean (NYSE: RCL). Those who make and sell necessities and inexpensive luxuries are less likely to suffer -- think Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), and Starbucks (Nasdaq: SBUX).

Longtime Fool contributor Selena Maranjian owns share of Pfizer.