N E W Y O R K, May 7 — A month-long surge in consumer confidence ended with a sharp snap this week, putting a quick and unceremonious end to hopes of a sustained rally. But it shouldn't be a surprise: Confidence followed almost exactly the same course after the 1991 Gulf War.
Giving up a third of its postwar gains, the ABCNEWS/Money magazine Consumer Comfort Index fell a steep four points this week to -19 on its scale of +100 to -100. Propelled by the war in Iraq, the index had jumped a remarkable 13 points in four weeks, last week reaching its best level in seven months.
The index's performance is very similar to its track in 1991. It rose 10 points in the five weeks following the war's successful end, then faltered, losing three points in one week after its peak and six points over the next month. The index continued down gradually, bottoming out at a record low -50 in early 1992.
Confidence is much better than it was at this time in 1991, with an index of -19 now compared to -31 then. But confidence is sharply down from its peak (+38 in January 2000) and 10 points below its average since this weekly survey began in December 1985....