California consumers see worst economy in 8 years – Daily News

on Jan30
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“Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.

Buzz: California shoppers think this is the worst economy since 2012.

Source: Conference Board’s Consumer Confidence Indexes.

The Trend

One slice of the index reveals significant financial anxieties in this pandemic era. California consumers’ view of conditions in January tumbled to 30.9 from 56.1 a month earlier and very depressed from 147.6 a year earlier. The last time this yardstick of economic strength was lower was March 2012, shortly after the Great Recession ended.

The Dissection

January was not a month for those with stomach ailments or weak hearts.

Politely put, political uncertainty was extremely high. The pandemic was scary, and the economy remained stagnant.

So January’s overall index rising 73.5 from a revised 66.1 a month earlier shows modest resilience. Do not forget consumer confidence scored 119.8 a year ago.

The glimmer of hope within the index comes from another building block — a measure of shoppers’ economic outlook. Californians’ future view scored 101.9 statewide — soaring above 72.7 the previous month and up from 101.3 a year earlier. The last time hopes were higher was March 2019.

Note that California is not a huge outlier with such mixed views. Just look at the seven other large states tracked by the Conference Board and the one-month change of heart.

Overall confidence, current views and the outlook all rose in Pennsylvania, Ohio, and Michigan. Texas was up in all but current views. All three benchmarks were lower in Florida, New York and Illinois.

U.S. consumer confidence index rose to 89.3 from 87.1 in December, but it’s down from 130.4 a year ago.

Like California, U.S. shoppers’ view of current conditions fell in the month and over 12 months. Meanwhile, consumers’ economic hopes nationwide were better compared with December but less optimistic vs. a year earlier.

How bubbly?

On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … TWO BUBBLES!

Nervous consumers are never good for the economy, but I’ll bet this is largely short-term indigestion of a sour mix of the pandemic and divisive politics.

Let’s note that the index’s polling was taken before the governor’s relaxation of coronavirus-related business restrictions. That should soothe some Californian worries as should progress in the fight against the virus, notably the vaccines.

Oh, and don’t forget Joe Biden, the newly inaugurated president, won California handily.

PS: Take comfort in U.S. consumer surveys regarding two big-ticket purchases within the next six months:

Buy a home? 7.2% of those polled have plans this month up from 6% a month earlier and above the 6.2% five-year average.

Car purchase? 10.7% said “yes” this month vs. 9.8% a month. That’s still down from a five-year average of 12.4%.

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